U5 
A5 
FORE 


.UC.-8ERKHJV  LIBRAE 

REPORT 


OF 

THE  FEDERAL  TRADE  COMMISSION 

ON 

LUMBER  MANUFACTURERS' 
TRADE  ASSOCIATIONS 


INCORPORATING  REPORTS 

OF 

JANUARY  10,  1921 
FEBRUARY  18,  1921 
JUNE  9,  1921 
FEBRUARY  15,  1922 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 
1922 


FEDERAL  TRADE  COMMISSION. 


NELSON   B.   GASKILL,   Chairman. 

VlCTOE   MURDOCK. 

JOHN  F.  NUGENT. 
HUSTON  THOMPSON. 

J.  P.  YODEB,  Secretary. 


Agric. 


ADDITIONAL  COPIES 

OF  THIS  PUBLICATION  MAY  BE  PROCURED  FROM 

THE  SUPERINTENDENT  OF  DOCUMENTS 

GOVERNMENT  PRINTING  OFFICE 

WASHINGTON,  D.  C. 

AT 

20  CENTS   PER  COPY 


CONTENTS. 


PART  I. 

REPORT  OF  JANUARY  10,  1921,  ON  PRELIMINARY  SURVEY  OF  LUMBER  MAN- 
UFACTURERS' NATIONAL  AND  REGIONAL  TRADE  ASSOCIATIONS. 

Page. 

Letter  of  transmittal x 

National  Lumber  Manufacturers'  Association 1 

Regional  associations . 2 

Regulation  of  production 2 

Stumpage  values  and  excess  profits  taxes 4 

Functions  of  the  national  as  seen  by  some  west  coast  manufacturers-  6 

Government  Relations  Committee , 8 

Attitude  of  national  toward  reforestation 8 

Southern  Pine  Association 10 

Antecedents 10 

Membership 11 

Price  activities  during  prewar  period 11 

Price  activities  during  war  period ^ 15 

Price  activities  in  post-war  period 21 

Prices  and  margins  of  profit , 27 

West  Coast  Lumbermen's  Association ' 30 

Membership 30 

Price  activities 30 

Miscellaneous  activities 35 

Western  Pine  Manufacturers'  Association 36 

Price  activities 36 

Other  activities _'__  38 

Northern  Hemlock  &  Hardwood  Manufacturers'  Association 38 

Bureau  of  statistics  and  educational  information 39 

Michigan  Hardwood  Manufacturers'  Association 40 

Committee  on  market  conditions 41 

Legal  advice  and  its  application 41 

Curtailment  of  production 44 

Cooperation  among  regional  associations _ . 44 

Purpose  of  cooperation , 44 

Cooperation  between  southern  pine  and  west  coast  lumbermens'  asso- 
ciations   45 

Cooperation   between   Wisconsin    and   Michigan   hemlock   manufac- 
turers  • 48 

Chicago  Retail  Lumber  Dealers'  Association 50 

Compilation  of  costs 51 

Reports  of  sales 51 

Pooling  of  business 52 

in 


4821? 


IV  CONTENTS. 

PAKT  II. 

REPORT  OF  FEBRUARY  18,  1921,  ON  SOUTHERN  PINE  ASSOCIATION  OF  NEW 

ORLEANS,  LA. 

Page. 

Letter  of  transmittal 56 

Introduction 57 

Trade-barometer  device 57 

Curtailment  of  production 59 

Prices  and  profits 61 

Concerted  actions  on  prices 62 

Market  conditions  subsequent  to  Commission's  investigation 63 

Propaganda  for  price  maintenance 64 

General  purposes  of  lumber  manufacturers'  associations 64 

PAET  III. 

REPORT  OF  JUNE  9,  1921,  ON  DOUGLAS  FIR  LUMBER  MANUFACTURERS'  AND 
LOGGERS'  ASSOCIATIONS. 

Letter  of  transmittal 1 68 

Summary 69 

Organizations  of  producers  in  douglas  fir  region 71 

Price  activities  of  West  Coast  Lumbermen's  Association 71 

Current  market  quotations 76 

Restriction  of  production  under  auspices  of  West  Coast  Lumbermen's 

Association 76 

Cooperation  between  West  Coast  Lumbermen's  Association  and  Western 

Pine  Manufacturers'  Association 78 

Price  and  curtailment  of  production  activities  of  loggers'  associations 80 

Relation  between  the  fir  log  and  lumber  markets 82 

Manufacturers'  profits  as  affected  by  loggers'  association  activities 83 

Long  continuance  of  foregoing  practices 84 

Increasing  importance  of  douglas  fir  region  as  source  of  supply 85 

Conditions  in  timber  ownership  of  douglas  fir  region 86 

Relation  of  lumber  manufacturers  to  retail  prices 87 

PAET  IV. 

REPORT  OF  FEBRUARY  15,  1922,  ON  WESTERN  PINE  MANUFACTURERS'  ASSO- 
CIATION OF  PORTLAND,  OREG. 

Letter  of  submittal 90 

Summary - 92 

Origin  and  scope  of  lumber  inquiry  by  Federal  Trade  Commission 95 

Position  and  influence  of  Western  Pine  Manufacturers'  Association  in 

the  industry 96 

Organization : 96 

Concentration  of  timber  ownership  in  association  territory 96 

Price  activities [ 97 

Pre-war  price  activities 99 

Price  activities  during  war  period 100 

Post-war  price  activities 104 

Prices,  costs,  and  margins 108 

Comparison  of  average  costs  with  average  prices 111 

Admission  of  unreasonable  prices  during  1919 112 


CONTENTS.  V 

Position  and  influence  of  Western  Pine  Manufacturers'  Association  in  the 

industry — Continued.  Page. 

Subsequent  course  of  the  market 113 

Analysis  of  present  prices 114 

Comparison  of  present  prices  with  war-time  prices 115 

Idaho  white  pine 115 

Western  yellow  pine 115 

Comparison  of  present  prices  with  1920  "  runaway  "  market  prices —  115 

Conclusions 116 

Price  activities  of  box  bureau 116 

Price  activities  of  Montana  Lumber  Manufacturers 119 

Relations  between  association's  price  fixing  activities  and  its  use  of  com- 
mon freight  basing  point , 121 

Relations  between  association's  price  fixing  activities  and  practice  of 

scant  sawing 123 

Relations  between  association's  price  fixing  activities  and  uniform  dis- 
counts to  and  discriminatory  classification  of  wholesale  trade 127 

Open  price  features  of  Western  Pine  Manufacturers'  Association  methods.  130 
Cooperation  between  Western  Pine  Manufacturers'  Association  and  West 

Coast   Lumbermen's  Association 132 

Cooperation  between  Western  Pine  Manufacturers'  Association  and  Cali- 
fornia and  Minnesota  pine  producers 136 

Restriction  of  production  under  auspices  of  Western  Pine  Manufacturers' 

Association 142 

Analysis  of  production  policy  during  1920-21 147 

Long  continuance  of  foregoing  activities  by  Western  Pine  Manufacturers' 

Association —  149 


PREFACE. 

The  Federal  Trade  Commission  collects  and  presents  in  this  vol- 
ume four  reports  dealing  with  lumber  manufacturers'  national  and 
regional  trade  associations,  each  of  which  was  separately  issued  but 
not  printed.  These  reports  result  from  an  inquiry  made  by  the 
Federal  Trade  Commission  at  the  request  of  the  Department  of 
Justice. 

The  volume  contains  four  parts,  each  complete  in  itself,  as  follows : 

Part  1.  A  general  survey  of  the  Lumber  Manufacturers  Trade 
Association,  National  and  Regional.  The  subsequent  reports  treat 
specific  regional  associations. 

Part  2.  The  Southern  Pine  Association. 

Part  3.  The  Douglas  Fir  Lumber  Manufacturers  and  Loggers 
Association. 

Part  4.  Western  Pine  Manufacturers  Association. 

FEDERAL  TRADE  COMMISSION. 

MARCH  29,  1922. 

VII 


PART  I 

PRELIMINARY  SURVEY  OF  LUMBER  MANUFACTURERS' 

NATIONAL  AND  REGIONAL  TRADE 

ASSOCIATIONS 


LETTER  OF  TRANSMITTAL. 


FEDERAL  T&ADE  COMMISSION, 

Washington,  January  10,  1921. 
To  the  President  of  the  Senate  and  the 

Speaker  of  the  House  of  Representatives: 

The  attention  of  the  Federal  Trade  Commission  has  been  directed 
to  the  congressional  inquiry  upon  the  subject  of  housing  and  recon- 
struction through  the  hearings  before  the  Committee  on  Housing  and 
Reconstruction  of  the  Senate,  at  which  time  certain  statements  have 
been  made  respecting  the  activities  of  those  engaged  in  the  manu- 
facture and  sale  of  building  materials. 

Recently,  at  the  request  of  the  Department  of  Justice,  an  exten- 
sive survey  of  all  the  associations  of  lumber  manufacturers  through- 
out the  United  States  has  been  made.  The  data  collected,  as  fast  as 
it  is  analyzed,  is  being  transmitted  to  the  Department  of  Justice. 

The  Commission,  being  of  the  opinion  that  certain  data  typifying 
the  actions  of  the  lumber  manufacturers  through  their  respective 
associations  will  be  responsive  to  the  congressional  inquiry,  submits 
some  information  which  it  has  in  its  files  to  the  Congress,  pursuant 
to  the  powers  granted  to  it  under  section  6,  paragraph  (f),  of  the 
Federal  Trade  Commission  act,  which  is  entitled,  "An  act  to  create 
the  Federal  Trade  Commission,  etc.,"  approved  September  26,  1914. 

The  data  herewith  transmitted  reveals  the  activities  of  the  lumber 
manufacturers  through  their  national  and  regional  associations  and 
shows  their  attitude  and  activities  toward  national  legislation, 
amendments  to  the  revenue  laws,  elimination  of  competition  of  com- 
petitive woods,  control  of  prices  and  production,  restriction  of  re- 
forestation, and  other  matters. 

The  documents  submitted  are  merely  informative,  and  should  not 
be  regarded  as  comprehending  all  the  information  with  the  Com- 
mission. 

By  direction  of  the  Commission: 

HUSTON  THOMPSON,  Chairman. 


LUMBER    MANUFACTURERS'    TRADE    ASSOCIA- 
TIONS. 


Part  1.— PRELIMINARY  SURVEY  OF  LUMBER  MANUFAC- 
TURERS' TRADE  ASSOCIATIONS. 


NATIONAL  LUMBER  MANUFACTURERS'  ASSOCIATION. 

The  lumber  consumed  within  the  United  States  comes  from  ap- 
proximately 10  different  regions  within  the  United  States.  In  each 
region  there  is  manufactured  a  certain  kind  of  lumber  which  forms 
the  great  bulk  of  the  region's  output.  The  principal  kinds  of  soft- 
wood lumber  are  southern  yellow  pine,  Douglas  fir,  western  yellow 
pine,  and  hemlock.  Our  largest  source  of  supply  is  the  southern 
yellow  pine  region.  Douglas  fir  lumber  is  next  in  importance. 
Figure  3,  page  17,  and  Table  7,  page  18,  of  Bulletin  No.  845  of  the 
United  States  Department  of  Agriculture,  shows  the  relative  and 
total  amount  of  each  kind  of  lumber  produced  in  each  region  for 
the  year  WLS^In  each  region  a  majority  of  the  manufacturers 
therein  have  formed  an  association  for  the  expressed  purpose  of 
bettering  conditions  in  the  marketing  of  their  lumber.  These  regional 
associations  have  formed  a  national  association,  known  as  the  Na- 
tional Lumber  Manufacturers'  Association,  with  headquarters  at  Chi- 
cago, 111.  Each  regional  association  compiles  statistics  upon  produc- 
tion, market  conditions  in  general,  sales  reports  showing  actual  prices 
obtained  for  lumber,  and  establishes  and  maintains  uniform  grading 
rules.  Several  of  them  maintain  a  uniform  cost  accounting  system. 
Various  other  activities  are  undertaken  to  accomplish  the  purpose  of 
their  organization. 

The  national  association  receives  statistics  upon  production  and 
consumption  from  each  of  the  regional  associations,  summarizes  the 
same  and  distributes  these  summaries  to  the  lumber  manufacturers 
through  the  regional  associations. 

The  national  association  compiles  other  statistics  bearing  upon 
the  lumber  industry  in  general.  It  has  also  been  very  active  in 
legislative  and  governmental  affairs  which  affect  this  industry. 
Mr.  L.  C.  Boyle,  a  Kansas  City  attorney,  with  offices  in  Washington, 
D.  C.,  is  employed  to  attend  to  such  matters  for  the  national  asso- 
ciation. He  also  represents  many  of  the  regional  associations. 

1 


2  LUMBEH  KA-tfUFACTURERS    TEADE  ASSOCIATIONS. 

Regional  associations. 

The  principal  regional  associations  represented  in  the  National 
Lumber  Manufacturers'  Association,  are  as  follows: 

1.  Southern  Pine  Association  (manufacturers  of  southern  yellow 
pine  lumber). 

2.  West  Coast  Lumbermen's  Association  (manufacturers  of  Doug- 
las fir  lumber). 

3.  Western  Pine  Manufacturers'  Association   (manufacturers  of 
western  white  and  yellow  pine). 

4.  Northern  Hemlock  and  Hardwood  Manufacturers'  Association 
(manufacturers  of  hemlock  and  hard  woods  in  Wisconsin  and  upper 
Michigan). 

5.  Michigan  Hardwood  Manufacturers'  Association  (manufactur- 
ers of  hemlock  and  hard  woods  in  Lower  Peninsula  of  Michigan). 

6.  Northern  Pine  Manufacturers'  Association  (manufacturers  of 
Minnesota  and  Wisconsin  northern  pine). 

7.  North  Carolina  Pine  Association  (manufacturers  of  yellow  pine 
lumber) . 

8.  Georgia-Florida  Sawmill  Association  (manufacturers  of  yellow 
pine  lumber). 

9.  Southern  Cypress  Manufacturers'  Association  (manufacturers 
of  cypress  lumber). 

10.  California  Sugar  and  White  Pine  Manufacturers'  Association. 

11.  Redwood  Manufacturers'  Association  (manufacturers  of  Cali- 
fornia redwood). 

Other  sources  of  supply  are  Pennsylvania  manufacturers  of  hem- 
lock, who  have  no  regional  association,  and  the  New  England  spruce 
manufacturers,  who  do  maintain  a  regional  association. 

Regulation  of  production. 

The  members  of  the  national  association  have  advocated  for  many 
years  that  they  should  be  permitted  to  concertedly  regulate  the  pro- 
duction of  lumber  for  the  expressed  purpose  of  conserving  the  na- 
tional resources.  Extensive  hearings  along  this  line  were  held  by 
the  Federal  Trade  Commission  during  the  year  1915.  Efforts  were 
made  to  induce  the  forest  service  department  of  the  United  States 
Department  of  Agriculture  to  aid  the  lumbermen  in  this  direction. 
The  entire  plan  was  fully  described  by  Mr.  Chas.  S.  Keith,  president 
of  the  Southern  Pine  Association  and  one  of  the  leading  spirits  of 
the  national  association,  in  a  letter,  under  date  of  October  22,  1915, 
to  Daniel  Howard,  of  Clarksburg,  W.  Va. 

This  letter  was  in  part  as  follows : 

You  would  probably  be  interested  in  a  talk  which  I  have  recently  had  with  a 
member  of  the  Forestry  Department  of  the  Federal  Government,  who  are  con- 
ducting an  investigation  of  the  lumber  industry  for  the  Federal  Trade  Com- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  3 

mission  in  connection  with  the  hearing  which  we  recently  had  with  that  body  on 
this  subject.  I  am  enclosing  you  herewith  a  copy  of  the  statement  which  the 
Southern  Pine  people  made  before  the  Federal  Trade  Commission  in  this  case, 
which  relates  to  the  trust  acts  and  to  cooperation. 

In  this  connection,  the  Forestry  Department  is  working  along  the  lines  that 
we  are,  and  they  have  recently  made  a  survey  of  lumbering  conditions,  costs  of 
production,  and  all  matters  entering  into  the  operations  of  the  West  Coast 
lumbering  interests,  including  fir,  redwood,  and  western  pine,  and  are  now  mak- 
ing the  same  investigation  as  to  Southern  Pine.  They  are  recommending : 

1st :  That  the  Government  withdraw  all  of  its  timber  from  the  market ; 

2nd :  That  the  lumber  industry  be  permitted  to  enter  into  agreements  to  pro- 
duce no  more  lumber  than  the  market  will  assimilate,  regulating  the  supply  to 
the  consumption ; 

3rd:  That  they  be  permitted  to  enter  into  cooperative  sales  agencies,  not  to 
have  more  than  50%  of  the  product  in  one  sales  agency ; 

4th :  That  they  be  permitted  to  enter  into  price  agreements,  until  such  time  as 
the  price  agreement  might  become  unreasonable,  fixing  a  minimum  price  at 
which  lumber  shall  be  sold ; 

5th :  That  they  be  ordered  to  have  uniform  methods  of  accounting ; 

6th  :  That  the  average  cost  of  production  shall  be  distributed  to  the  items  pro- 
duced, and  that  a  cost  list  be  prepared  on  which  lumbermen  may  sell  their 
product  instead  of  upon  a  price  list  as  at  present ; 

7th :  The  measure  of  the  reasonableness  or  unreasonableness  of  the  price 
agreement  to  be  fixed  on  the  following  basis : 

(a)  That  the  cost  of  manufacturing  property  be  divided  by  the  amount  of 
timber  behind  the  mill,  fixing  a  sinking  fund  for  extinguishment,  this  extinguish- 
ment in  no  case  to  exceed  20  years. 

(b)  That  they  shall  charge  to  their  operations  the  price  for  raw  material 
based  on  the  cost  of  replacement  at  the  beginning  of  any  year ; 

(c)  That  they  be  permitted  to  earn  12%  on  the  original  cost  of  the  manufac- 
turing plant ; 

(d)  That  they  be  permitted  to  earn  7%  on  their  quick  assets,  such  as  stocks 
of  merchandise,  lumber,  and  bills  receivable,  and  lastly ; 

(e)  That  they  be  permitted  to  earn  7%  on  the  raw  material,  based  on  a 
replacement  value. 

Mr.  Keith  further  explained  that  it  would  be  necessary  to  advance 
the  price  on  southern  pine  lumber  $13.75  per  thousand  in  order  to 
put  this  plan  in  effect,  which  would  have  been  equivalent  to  $196,- 
000,000  on  the  whole  southern  pine  output.  This  would  have  practi- 
cally doubled  the  average  price  then  in  effect. 

Further  light  upon  the  aims  of  the  lumber  manufacturers  is  shown 
in  a  letter  written  by  Mr.  Edward  Hines,  under  date  of  December 
9,  1916,  to  Mr.  M.  B.  Nelson,  of  the  Long-Bell  Lumber  Co.,  giving 
an  account  of  a  conference  "with  a  prominent  official  of  the  steel 
people  "  about  conditions  in  general,  Mr.  Hines  wrote  in  part : 

He  acknowledged  all  this  pleasantly,  but  added  that  the  steel  people  were 
passing  on  to  the  ultimate  consumer  not  alone  the  added  cost  of  doing  business, 
but  also  an  additional  profit,  and  that  apparently  the  lumbermen  were  so  dis- 
organized, so  afraid  of  the  so-called  laws  prohibiting  them  doing  anything  of  this 
kind,  that  we  were  really  suffering  from  our  own  weakness.  He  seemed  to  be 
pretty  well  informed  on  our  business.  Unfortunately  I  had  to  acknowledge  the 


4  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

corn.  We  apparently  all  know  the  nature  of  the  disease  we  are  suffering  from 
and  also  know  the  nature  of  the  proper  cure  for  it,  but  seem  to  lack  the  courage 
to  take  the  cure.  Conservatively  speaking,  I  think  all  sides  now  are  earnestly 
hoping  for  a  legal  relief  whereby  we  may  be  permitted  to  get  together  in  groups 
and  take  care  of  our  business  along  the  lines  compatible  with  conditions.  Our 
conditions  show  clearly  that  the  days  of  individualism  are  gone  and  we  are  badly 
in  need  of  the  same  treatment  as  the  steel  people  were  successful  in  having  ad- 
ministered legally. 

The  bill  Mr.  Keith  is  working  on  at  Washington,  covers  to  my  mind,  pretty 
well  the  cure  and  I  do  earnestly  hope  that  nothing  will  happen  to  him  to  prevent 
his  continuing  on  it. 

Before  leaving  Chicago  yesterday  noon  I  arranged  to  have  some  of  the  Chi- 
cago newspapers  arrange  to  give  considerable  favorable  publicity  in  the  way  of 
urging  everyone,  particularly  the  chambers  of  Commerce,  to  act  favorably  on 
the  referendum  vote  on  this  measure,  giving  them  some  brief  facts  why  it  was 
in  the  interest  of  posterity,  and  to  the  interest  of  present  labor  and  manufac- 
turers, to  unite  on  something  whereby  relief  could  be  had  for  these  new  condi- 
tions. 

******* 

It  seems  as  if  the  entire  lumber  industry  looks  to  Yellow  Pine;  if  the  price 
of  Yellow  Pine  can  be  maintained,  everything  else  apparently  can  take  care  of 
itself,  and  there  should  be  some  intelligent  exchange  of  ideas  between  the  Yel- 
low Pine  people,  and  especially  the  Fir  manufacturers.  We  have  got  to  get  firmly 
settled  in  our  minds,  with  the  changed  conditions  taking  place,  that  an  advance 
of  a  matter  of  25  or  50^  means  nothing  when  you  face  an  extra  cost  of  log- 
ging and  manufacturing  of  more  than  $3.00  and  we  should  get  an  average  of 
$5.00  more  for  lumber  next  year  to  get  about  the  same  returns  for  our  stumpage 
with  a  very  small  additional  manufacturing  profit.  The  trouble  is  the  lumber- 
men can  apparently  not  get  into  their  minds  what  their  product  is  really  worth 
compared  with  everything  that  comes  in  competition  with  it.  I  have  just  heard 
of  a  recent  sale  of  the  Weyerhaeuser  companies  of  a  large  tract  of  timber  in 
Louisiana,  and  considering  the  price  they  received  for  it,  Yellow  Pine  should 
bring  today  at  all  mills  not  less  than  a  $20.00  average,  to  give  parties  who 
bought  this  timber,  any  material  handling,  of  the  timber  they  bought.  To  my 
mind  it  means  $7.00  stumpage,  and  adding  to  it  the  cost  of  logging,  manufactur- 
ing and  selling  they  cannot  materially  make  any  money  at  less  than  a  $20.00 
average. 

Stumpage  values  and  excess  profits  taxes. 

While  Congress  was  considering  the  enactment  of  revenue  laws  to 
provide  for  funds  to  meet  war  expenses,  representations  were  made 
to  Congress  by  the  lumber  manufacturers  that  in  estimating  their 
investment  as  a  basis  for  computing  costs  they  be  permitted  to  take 
the  market  value  of  stumpage  as  of  March  1,  1913,  rather  than  the 
actual  cost  of  said  stumpage. 

The  importance  of  this  difference  was  indicated  in  a  letter  of  Mr. 
Chas.  S.  Keith  to  Mr.  Wilson  Compton  secretary  of  the  national 
association,  under  date  of  November  27, 1918,  in  which  he  wrote : 

I  do  not  think  it  is  well,  at  least  not  psychological,  to  attract  attention  to  the 
extent  in  dollars  and  cents  to  which  the  industry  may  be  affected,  and  believe 
it  would  be  better  to  direct  attention  to  the  inequalities  produced  on  the  basis 
of  the  situation  as  applied  to  each  thousand  feet  of  lumber  produced. 


LUMBER  MANUFACTURERS7   TRADE   ASSOCIATIONS.  5 

There  is  no  question  the  Government  needs  funds  and  there  is  no  disposition 
on  the  part  of  manufacturers  of  lumber  not  to  pay  their  just  proportion  of 
taxes,  but  I  am  afraid  if  it  is  shown  there  is  Two  Billion  Dollars  more 
invested  capital  in  the  business  than  the  definition  will  permit,  a  deduction  of 
ten  per  cent  on  wrhich  would  mean  a  loss  of  Two  Hundred  Million  Dollars  in 
taxes,  it  might  have  the  effect  of  causing  the  Senate  Committee  to  conclude  to 
let  the  proposition  stand  and  permit  the  courts  to  determine  whether  or  not 
the  interpretation  of  the  Treasury  Department  is  correct  or  otherwise.  I, 
therefore,  suggested  to  Mr.  Boyle  that  he  eliminate  that  feature ;  in  fact  insisted 
upon  it,  but  on  considering  the  matter  he  agreed  with  me  as  to  the  desirability 
of  not  laying  stress  upon  this  point. 

Secretary  Compton,  in  replying  on  November  29,  said: 

The  prominence  of  my  mention  of  the  amount  of  a  billion  and  a  half  or  two 
billion  dollars  as  the  total  amount  involved  is  rather  for  home  consumption,  so 
that  lumbermen  themselves  might  know  what  the  proper  solution  of  this  revenue 
matter  means  to  the  industry  in  dollars  and  cents. 

Replying  to  Secretary  Compton,  on  November  30,  Mr.  Keith  said : 

I  am  afraid  we  may  bring  the  attention  of  Congress  to  the  loss  of  income, 
which  might  accrue  by  writing  off  the  books  Two  or  Three  Billion  dollars  of 
invested  capital,  which  might  lead  us  into  more  serious  difficulties. 

The  revenue  law  was  amended  as  requested,  so  that  it  became  neces- 
sary in  the  year  1919  to  determine  stumpage  values  as  of  the  year 
1913.  It  was  necessary  for  the  Internal  Revenue  Department  to  se- 
cure the  services  of  a  practical  lumberman  to  aid  in  this  work.  With 
reference  to  this  entire  matter  Mr.  Boyle  wrote  Mr.  E.  A.  Selfridge 
on  March  5,  1919,  as  follows: 

There  is  no  man  in  the  entire  field  more  competent  than  Dr.  Compton  to 
work  out  a  plan,  and  have  the  details  worked  out  under  his  observation.  Comp- 
ton has  the  confidence  of  the  Department  and  with  Compton's  approval  on  data 
thus  gathered  I  am  quite  sure  that  Roper  would  be  disposed  to  consider  it  as 
practically  authentic.  Compton  could  take  a  man  like  E.  T.  Allen  and  turn 
over  to  him  the  responsibility  of  working  out  the  details  of  the  timber  phase 
of  the  general  problem.  For,  after  all,  it  is  the  raw  material  supply  that 
constitutes  the  outstanding  problem  to  be  solved.  George  Ward  of  the  Georgia- 
Florida  Association,  is  a  man  of  practical  accountancy  experience,  now  being 
the  auditor  of  the  Georgia-Florida  Association,  he  has  also  had  mill  experience. 
To  him  could  be  turned  over  the  auditing  phase  of  the  problem,  and  so  on 
down  the  line.  Thus  we  could  develop  as  to  the  various  regions  of  the  industry 
correct  principles  covering  questions  of  depletion,  depreciation,  and  invested 
capital.  The  possibilities  of  the  plan  are  unlimited. 

I  am  telling  the  suggestion  to  you  in  order  that  I  may  lead  up  to  another 
suggestion;  Commissioner  Roper  will  still  need  the  services  of  an  experienced 
man  familiar  with  the  lumber  problem.  In  canvassing  the  field  with  Allen  he 
has  suggested  the  name  of  Major  D.  T.  Mason,  now  connected  with  the  Uni- 
versity of  California.  I  know  Mason  and  he  would  be  perfectly  satisfactory. 
The  query  is  could  he  afford  to  make  the  sacrifice?  It  is  possible  that  Mason 
Is  tied  up  by  contract.  Now,  somebody  with  experience  and  sympathetic 
understanding  has  got  to  take  this  job.  Among  the  operators  either  Charlie 
Keith,  Ed  Hazen  or  yourself  would  be  capable  of  working  out  the  technique  of 
the  plan  within  the  Department  but,  of  course,  neither  one  of  you  three  men 


6  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

can  afford  to  leave  your  business.  The  type  of  men  who  are  employed  and 
who  might  be  capable  can  not  afford  to  give  up  a  larger  salary  to  take  the 
smaller  one.  So  whichever  way  we  turn  we  are  met  with  these  serious 
difficulties. 

One  of  the  conferences  of  the  lumber  manufacturers  with  the 
representative  of  the  Internal  Revenue  Department  was  described 
by  Mr.  Robert  Ash,  assistant  to  Mr.  Boyle,  in  a  letter  to  Secretary 
Compton,  dated  June  20,  1919,  as  follows : 

This  is  to  let  you  know  the  progress  that  has  been  made  at  the  conference 
with  Mr.  Mason.  Mr.  E.  T.  Allen  took  charge  of  the  meeting  on  the  18th  and 
handled  it  in  a  splendid  manner.  The  first  morning  was  devoted  to  a  general 
discussion  in  which  it  was  endeavored  to  create  on  the  part  of  the  lumbermen 
a  proper  frame  of  mind.  That  unquestionably  was  a  wise  move,  as  there  were 
one  or  two  men  in  the  delegation  who  seemed  to  have  a  rather  hostile  attitude 
toward  the  Bureau  of  Internal  Revenue,  to  wit :  Mr.  Holt  and  Mr.  L.  C.  Bell. 
It  took  some  little  time  to  make  some  of  these  men  come  to  the  realization 
that  whatever  efforts  were  being  made  were  made  for  their  benefit.  The  atmos- 
phere soon  cleared,  however,  and  I  believe  all  those  present  have  been  looking 
at  the  situation  from  the  right  viewpoint. 

On  the  afternoon  of  the  18th  and  on  the  morning  of  the  19th  the  lumbermen 
got  together  without  Major  Mason  or  representatives  of  the  Bureau  and 
decided  upon  their  position  as  regards  the  principal  features  of  the  ques- 
tionnaire; the  manner  in  which  the  individual  units  within  the  industry 
were  to  be  educated  that  the  filling  in  of  the  questionnaire  was  advanta- 
geous to  them,  if  the  statistics  were  to  be  available  for  publication  by  the 
regional  associations,  etc.  Yesterday  afternoon  Major  Mason  was  again 
called  into  the  meeting  and  the  contentions  of  the  lumbermen  as  regards  the 
principal  items  covered  by  the  questionnaire  were  presented  to  Major  Mason. 
Much  to  the  surprise  of  the  lumbermen,  Major  Mason  conceded  every  point 
brought  up.  The  question  of  how  depletion  should  be  computed  was  not 
brought  up,  it  being  the  thought  of  the  meeting  that  a  brief  on  that  subject 
should  be  carefully  worked  out  and  presented — that  they  should  not  risk  hav- 
ing their  contentions  turned  down  in  an  oral  discussion  of  the  subject.  It  is 
probable  that  this  brief  will  be  worked  out  later  in  the  meeting.  This  morn- 
ing the  meeting  is  taking  up  with  Major  Mason  relatively  small  details  covered 
by  the  questionnaire. 

Some  idea  of  the  value  of  these  conferences  was  given  by  Secretary 
Compton  in  a  letter,  dated  July  2, 1919,  in  which  he  stated  that  these 
conferences  have  resulted  in  saving  "  certainly  not  less  than  several 
millions  of  dollars  to  the  lumber  industry  and  other  owners  of  timber 
properties." 

Functions  of  the  National  as  seen  by  some  west  coast  manufacturers. 

The  board  of  directors  which  control  the  policies  of  the  national 
association  are  chosen  from  the  various  regional  associations.  There 
appears  to  have  been  more  or  less  friction  among  the  regional  asso- 
ciations concerning  policies  which  should  be  followed  by  the  national. 
This  is  illustrated  by  a  letter  written  by  a  member  of  the  board  of 
directors  of  the  national  association,  who  was  also  one  of  the  trustees 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  7 

of  the  West  Coast  Lumbermen's  Association,  to  Mr.  R.  B.  Allen,  sec- 
retary of  the  latter  association,  under  date  of  January  29, 1918.  He 
wrote  as  follows : 

A  copy  of  Mr.  E.  T.  Allen's  letter  to  you  of  January  25th  has  come  to  my  desk 
and  it  looks  as  though  I  had  stirred  up  the  animals  again.  I  think  it  is  about 
time  for  me  to  resign  all  around,  for  I  do  not  know  that  any  good  has  been 
accomplished  because  of  the  stand  I  have  taken  on  several  Association  matters. 

Personally,  I  do  not  believe  in  maintaining  a  Lobbyist  at  a  salary  to  exceed 
$10,000.00  a  year  and  really  do  not  believe  in  that  kind  of  business  anyway.  I 
am  not  the  kind  of  a  man  to  represent  our  Association  in  the  National  and  will 
probably  resign.  The  National  is  beneficial  largely  to  particularly  large  inter- 
ests like  Blodgett,  Hines,  Weyerhaeuser  interests,  etc.,  but  what  is  the  use  of  a 
man  who  does  not  own  a  foot  of  timber  and  whose  interests  are  small  and  who 
is  poor,  devoting  his  time  to  such  a  cause. 

I  do  not  think  our  association  belongs  there  anyway  or  that  the  National 
should  be  made  up  of  regional  Associations  but,  on  the  other  hand,  should 
be  supported  by,  and  its  membership  consist  of,  men  who  are  largely  operators 
or  timber  owners.  It  never  has  appealed  to  me  and  I  have  no  heart  to  go 
ahead  in  work  of  this  kind.  I  think  it  is  all  wrong  to  spend  the  money  we 
are  spending  because  we  are  not  getting  results  and  the  Trade  Extension  De- 
partment is  only  a  side  issue.  It  is  maintained  and  furthered  in  order  to  pacify 
and  hold  together  the  several  Associations  which  go  to  make  up  the  one  body. 
Its  principal  function  is  politics  and  I  am  a  mighty  poor  politician  and  do  not 
like  that  kind  of  procedure  anyway.  If  I  can  not  get  across  on  a  legitimate 
basis,  I  would  rather  stay  on  this  side.  If  I  cannot  keep  my  taxes  within 
reason  by  following  the  legitimate  course  of  procedure,  I  would  rather  pay 
more.  I  hate  the  kind  of  system  as  expounded  by  Hines,  Keith  and  the  re- 
mainder of  that  tribe  and  as  long  as  I  am  not  in  sympathy,  how  can  I  be 
of  service  to  our  Association. 

I  feel  as  sure  as  can  be  that  if  I  represent  the  West  Coast  Association  at 
the  annual  meeting  in  April,  I  will  return  determined  to  sever  the  West  Coast 
Association  membership. 

I  think  my  attitude  ought  to  be  fully  understood  by  the  Trustees  and  the 
President  and  that  I  ought  not  to  be  considered  eligible  to  attend  that  meeting 
without  my  present  attitude  of  mind  being  thoroughly  known. 

Take  this  man  Goodman ;  see  what  E.  T.  Allen  says  about  him,  listen  to 
his  talk,  look  at  him,  see  the  people  he  cohorts  with  and  then  sum  it  all 
up  and  see  what  is  left;  just  a  schemer,  pure  and  simple,  a  man  to  play  the 
game  in  the  interests  of  such  men  as  Hines.  I  hate  it  all,  and  am  sure  that 
as  long  as  the  Southern  Pine  Association  is  dominated  by  Keith  and  it  re- 
tains its  membership  in  the  National,  we  will  have  nothing  but  fraction  and 
our  membership  will  be  courted  for  the  sole  purpose  of  holding  our  prestige 
and  financial  support. 

I  commend  this  tirade  to  your  most  thoughtful  but  generous  consideration. 

Replying  on  January  31,  Secretary  Allen  said : 

Acknowledging  your  letter  of  January  29th,  have  discussed  the  situation  with 
Mr.  Burnside  and  he  asked  me  to  say  to  you  that  you  are  not  alone  in  your 
analysis  of  the  National  Lumber  Manufacturers'  Association  and  our  probable 
future  relations  thereto. 

From  what  Mr.  Burnside  said  I  infer  that  it  is  his  urgent  desire  that  you 
continue  as  a  representative  of  this  Association  on  the  Board  of  Directors  of 
91321°— 22 2 


8  LUMBER   MANUFACTURERS '   TRADE   ASSOCIATIONS. 

the  National.  I  am  sure  that  the  entire  membership  and  your  colleagues  on 
the  Board  of  Trustees  will  express  the  same  desire  if  there  is  occasion  to 
place  this  matter  before  them. 

Mr.  Burnside  was  president  of  the  West  Coast  Association  at  this 
time. 

Government  Relations  Committee. 

A  special  committee  upon  "  government  relations  "  was  appointed 
by  the  national  association.  The  functions  of  this  committee  were 
fully  outlined  by  Mr.  Boyle  in  his  letter  to  Mr.  Keith,  dated  May 
5,  1919,  in  which  he  wrote  in  part : 

To  my  mind,  the  outstanding  opportunity  your  committee  has  to  serve  the 
industry  and  also  the  country  at  large  is  to  so  mobilize  its  units  that  they 
may  be  in  a  position  to  more  adequately  defend  themselves  against  the  de- 
structive tendencies  of  the  hour.  The  result  can  be  aided  by  the  industry 
being  kept  fully  advised  through  your  committee  of  Governmental  activities — 
political,  legislative  and  departmental — that  have  for  their  direct  or  indirect 
object  invasion  of  constitutional  guarantees.  Due  to  this  character  of  informa- 
tion the  operators  may  be  induced  to  pay  less  attention  to  the  political  com- 
plexion of  a  candidate  for  office  and  more  attention  to  his  standing  as  a  bona 
fide  American  citizen — one  who  understands  that  we  live  under  a  constitutional 
form  of  government. 

Mr.  Boyle  further  referred  to  this  committee  in  a  letter  of  May  8 
to  Mr.  Keith  in  which  he  added : 

it  would  be  unwise  to  spread  broadcast  the  plan  of  organizing  your  committee 
and  this  especially  if  the  organization  is  to  be  comprehensive  of  the  industry, 
because  the  very  magnitude  of  the  plan  would  challenge  attention  and  arouse 
suspicion.  • 

Attitude  of  the  national  toward  reforestation. 

It  appears  that  the  lumber  manufacturers  were  not  always  con- 
sistent in  a  policy  of  conserving  our  natural  resources  when  such 
policy  affected  the  lumber  industry  adversely.  Mr.  A.  L.  Osborn,  a 
member  of  this  committee  on  governmental  relations,  wrote  Mr. 
Keith%  chairman  of  that  committee,  on  July  7,  1919,  upon  the  atti- 
tude of  the  Forest  Service  toward  reforestation.  Mr.  Osborn  pointed 
out  that  the  cost  of  reproduction  for  timber  with  an  initial  valua- 
tion of  $7  per  thousand  would  be  $39  per  thousand  at  the  end  of  the 
next  70-year  period,  while  the  reproduction  of  northern  white  pine 
would  cost  $75  per  thousand.  He  then  continued : 

I  believe  that  it  should  be  shown  that  if  the  public  plants  trees,  it  will  cost 
double  what  they  ever  can  be  worth  and  that  it  will  not  pay  for  the  public  to 
plant  trees.  That  it  will  also  not  pay  for  private  persons  or  corporations  to 
plant  trees. 

The  threat  of  a  split  between  the  Forest  Service  and  the  industry 
was  then  touched  upon,  as  follows: 

We  have  evidence  in  this  office  that  Graves  has  started  out  for  (on)  a  news- 
paper propaganda  in  regard  to  compelling  reforestation. 


LUMBER  MANUFACTURERS '   TRADE  ASSOCIATIONS.  9 

I  think  the  way  to  meet  this  problem  is  to  urge  him  to  confer  with  someone, 
presumably  your  Committee,  in  regard  to  the  whole  problem.  That  was  the 
talk  and  spirit  in  the  meeting  of  the  National  and  I  believe  we  ought  to  take 
the  initiative  to  force  him  to  come  right  down  to  brass  tacks  on  what  can  be 
done  under  his  proposed  plan. 

The  theory  of  the  lumbermen  that  the  best  method  of  conservation 
was  to  make  lumber  and  timber  more  expensive  and  that  the  Forest 
Service  should  further  that  program,  was  then  described  by  Mr. 
Osborn : 

I  feel  that  as  a  part  of  the  program  that  he  should  be  nailed  right  down 
to  take  a  stand  as  to  whether  he  will  go  before  Congress  and  tell  it  that  as 
long  as  timber  land  owners  are  taxed  off  the  face  of  the  earth  and  are  pro- 
hibited from  a  restriction  of  production  when  production  should  not  take 
place  because  of  there  being  no  need  for  it,  that  timber  will  be  wasted,  and 
that  no  plan  for  growing  trees  can  be  so  effective  as  a  plan  for  relief  of  the 
present  burdens  that  timber  land  owners  are  under. 

The  question  of  tactics  to  meet  threatened  recrudescence  of  re- 
forestation sentiment  under  the  leadership  of  Forester  Graves  was 
then  discussed,  as  follows : 

I  recognize  that  if  your  plan  to  carry  the  war  to  the  camp  of  the  reforestation 
crowd  can  be  carried  out  that  it  will  be  effective,  but  I  do  not  see  very  clearly 
how  an  action  for  libel  can  be  brought  on  the  part  of  the  industry.  It  seems 
to  me  the  industry  is  lied  about  and  not  the  individual.  If  I  am  wrong  about 
this  it  would  change  my  idea  about  what  plan  ought  to  be  used. 

I  well  remember  my  indignation  at  the  time  Gifford  Pinchot  had  the  ear 
of  President  Roosevelt  and  was  urging  in  a  very  loud  and  noisy  way  the  same 
things  Graves  has  started  now  in  a  little  way.  The  wave  of  sentiment  in  favor 
of  reforestation  seemed  to  have  died  out  after  Pinchot  was  eliminated  and  I 
do  not  believe  that  we  are  at  present  in  any  great  danger,  but  I  do  believe 
that  we  ought  to  meet  the  issue  fairly  and  squarely.  Let  me  know  if  I  can  do 
anything  further. 

I  will  keep  you  posted  from  time  to  time  as  to  anything  I  get  from  the 
Forestry  Department.  I  wish  you  would  return  for  my  file,  the  data  sent 
herewith. 

Mr.  Keith,  in  a  letter  of  July  9,  1919,  to  J.  H.  Kirby,  president  of 
the  National  Lumber  Manufacturers'  Association,  said : 

I  am  handing  you  herewith  copy  of  letter  received  from  Mr.  A.  L.  Osborn 
today,  and  I  think  the  suggestion  of  meeting  with  Chief  Forester  Graves  should 
be  carried  out  as  soon  as  it  can  conveniently  be  done.  At  least  we  should  make 
a  request  for  such  meeting,  in  pursuance  to  his  suggestion. 

If  Graves  continues  his  publicity  campaign  we  will  be  in  the  proper  position 
when  we  come  to  the  conflict,  for  the  following  reasons,  first,  we  have  agreed 
to  meet  with  him;  second,  a  committee  has  been  appointed  for  that  purpose; 
third,  that  committee  has  requested  a  meeting  for  such  discussion ;  fourth, 
Graves  has,  in  advance  of  meeting  and  after  the  request  for  the  meeting,  pur- 
sued a  policy  propaganda  in  an  effort  to  put  into  effect  his  personal  ideas,  in 
absence  of  any  agreement  with  the  industry.  It  seems  to  me  that  our  position 
is  a  favorable  one,  in  case  it  becomes  necessary  for  us  to  "  go  to  the  mat "  on 
the  subject. 


10  LUMBER   MANUFACTURERS7   TRADE  ASSOCIATIONS. 

SOUTHERN  PINE  ASSOCIATION. 
Antecedents. 

For  several  years  prior  to  the  year  1914,  the  yellow  pine  manufac- 
turers maintained  a  voluntary  association  under  the  name  "  Yellow 
Pine  Manufacturers  Association."  Its  headquarters  were  at  St. 
Louis,  Mo.  About  the  year  1909  the  attorney  general  of  the  State  of 
Missouri  instituted  quo  warranto  proceedings  against  several  Missouri 
lumber  manufacturing  corporations  who  were  members  of  this  asso- 
ciation, charging,  among  other  things,  that  this  association  was  used 
as  a  medium  whereby  the  prices  of  yellow  pine  lumber  were  fixed  and 
the  production  of  same  regulated  by  agreement  or  understanding. 
This  appears  to  have  been  the  only  proceedings  ever  instituted  against 
any  of  the  various  lumber  manufacturers  associations.  The  case  was 
strongly  contested  and  carried  to  the  Supreme  Court  of  the  State  of 
Missouri.  A  decision  was  handed  down  in  December,  1913,  adversely 
to  the  association.  A  judgment  of  ouster  from  the  State  of  Missouri 
was  rendered  together  with  heavy  fines.  Later,  these  fines  were  re- 
duced and  the  judgment  of  ouster  suspended  upon  certain  conditions. 
Among  these  conditions  these  concerns  were  required  to  show  by  affi- 
davit that  they  had  withdrawn  from  the  association  and  had  agreed 
not  to  join  any  other  association  of  a  like  character,  and  to  sell  lum- 
ber in  Missouri  in  open  and  fair  competition.  The  final  decree  of 
this  court,  as  modified,  was  entered  about  the  month  of  June,  1914. 

This  association  was  dissolved  shortly  afterward,  but  with  its  dis- 
solution the  present  association,  known  as  the  Southern  Pine  Associ- 
ation, was  formed  by  the  same  members  who  were  made  parties 
defendant  to  the  above  court  proceedings.  The  new  association  took 
over  the  assets  and  assumed  the  liabilities  of  the  old.  The  president 
and  one  of  the  trustees  of  the  old  association  became  directors  of  the 
new  one,  and  a  majority  of  the  members  of  the  old  became  affiliated 
with  the  new.  Mr.  Chas.  S.  Keith,  president  of  the  Central  Coal  & 
Coke  Co.,  of  Kansas  City,  became  the  first  president  of  the  new  asso- 
ciation, and  held  that  office  continuously  until  the  year  1919.  The  sur- 
vey of  this  association  by  this  Commission  reveals  that  the  new  asso- 
ciation continued  many  of  the  activities  of  the  old  one. 

With  reference  to  the  hearings  before  the  Federal  Trade  Commis- 
sion at  the  time,  and  apparently  mindful  of  the  action  taken  by  the 
Missouri  officials,  Mr.  L.  C.  Boyle  wrote  Mr.  Chas.  S.  Keith  on 
August  15,  1915,  as  follows : 

.  1  can  not  undertake  to  review  the  entire  field  in  the  scope  of  this  letter,  as  I 
know  your  dislike  for  long  letters.  However,  let  me  say  this,  that  the  Lumber- 
men's hearing  which  you  originally  initiated  has  been  a  great  success.  There 
has  been  fine  publicity  and  if  the  law  can  help,  we  will  have  the  benefit  of  it. 
Tte  superstition  as  to  a  Lumbermen's  Trust  has  been  dispelled ;  it  is  now  up, 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  11 

to  the  industry  to  readjust  itself  and  get  on  a  substantial  footing.  I  realize  that 
it  will  be  necessary  to  take  into  account  the  State  authorities  of  Texas  and 
Missouri.  We  will  have  no  trouble  in  Kansas.  As  far  as  the  Attorney  Gen- 
eral's office  of  Missouri  is  concerned  I  know  that  we  are  all  right ;  Barker  is  my 
friend  and  will  be  helpful.  As  to  the  Supreme  Court  judges,  we  will  have  to 
discuss  that  of  course  with  Mr.  Lucas.  Through  the  help  of  Kirby,  we  ought  to 
get  a  pretty  definite  angle  on  the  Texas  situation.  Much  careful  work  must  be 
done,  but  believe  me,  we  can  solve  our  trouble  if  we  go  about  it  right  and  stick 
to  it  You  are  about  to  reap  the  harvest  of  your  great  labors,  and  if  there  is  a 
man  in  the  entire  industry  that  is  entitled  to  credit,  you  are  the  man. 

Membership. 

Official  records  indicate  that  in  1918,  60  per  cent  of  the  entire  south- 
ern yellow  pine  production  was  controlled  by  members  of  this  asso- 
ciation. Eleven  members  of  this  association  represent  about  45  per 
cent  of  the  association's  production,  while  24  concerns  represent 
nearly  65  per  cent  of  it.  There  are  approximately  200  members  of 
this  association. 

Price  activities  during  prewar  period. 

The  meeting  of  this  association  held  April  20,  1915,  is  taken  as 
an  example  for  this  period.  The  action  to  be  taken  at  this  meeting 
was  described  by  Mr.  M.  J.  Scanlon,  of  the  Brook-Scanlon  Co.,  in 
his  letter  dated  April  15,  1915,  to  their  Minneapolis  office  in  which 
he  wrote : 

I  intended  to  leave  Kentwood  next  Sunday  morning,  returning  home  by 
way  of  St.  Louis,  but  received  telegram  today  from  Charles  S.  Keith  of  Kansas 
City,  President  of  the  Southern  Pine  Association,  requesting  that  I  attend  a 
meeting  of  the  lumber  manufacturers  to  be  held  in  New  Orleans  on  the  20th. 
Inasmuch  as  Mr.  Foley  will  not  be  home  in  time  to  attend  this  meeting,  I 
wired  Mr.  Keith  that  I  would  arrange  to  do  so.  It  may  possibly  interfere 
with  some  plans  that  you  have  for  me,  and  if  so  kindly  advise  by  wire. 

I  do  not  know  that  a  meeting  of  the  manufacturers  at  this  time  will  ac- 
complish very  much,  but  prices  at  which  lumber  in  Yellow  Pine  is  being  sold 
are  so  low  that  every  effort  should  be  made  to  try  and  get  on  a  better  basis. 

Mr.  Scanlon  described  the  matters  considered  at  this  meeting  in 
his  letter,  dated  April  28,  1915,  which  was  in  part  as  follows : 

Enclosed  please  find  copy  of  a  circular  letter  sent  out  by  the  Wisconsin  and 
Arkansas  Lumber  Company  of  Malvern,  Ark.,  with  copy  of  our  reply. 

At  the  recent  meeting  of  the  manufacturers  in  New  Orleans,  those  present 
stated  that,  unless  they  could  at  least  get  fair  price  for  their  stumpage,  they 
would  not  be  willing  to  put  their  lumber  on  the  market  at  present  ruinous 
prices.  In  other  words  they  proposed  to  get  somewhere  in  the  vicinity  of 
$5.00  for  their  stumpage  and  would  only  manufacture  such  an  amount  of 
lumber  as  could  be  sold  to  net  them  that  figure.  One  of  the  present  troubles 
is,  of  course,  that  these  people  are  engaged  in  the  manufacture  and  sale  of 
:short  leaf  pine,  while  we  are  selling,  exclusively,  long  leaf.  After  you  look 
this  letter  over  carefully,  will  be  glad  to  hear  from  you.  Would  also  like  to 
know,  at  the  same  time,  how  the  demand  and  prices  have  been  for  the  last 
ten  days. 


12  LUMBER   MANUFACTURERS '   TRADE  ASSOCIATIONS. 

Mr.  Edw.  Hines  throws  further  light  on  the  results  accomplished 
by  this  meeting  in  his  letter  to  Mr.  F.  E.  Weyerhaeuser,  of  St.  Paul, 
under  date  of  May  6,  1915,  in  which  he  stated : 

The  Yellow  Pine  people  are  certainly  making  a  strong  effort  now ;  they  have 
advanced  prices  from  $1  to  $1.50  on  all  kinds  of  Common  lumber  and  maintain- 
ing it  for  the  past  ten  days.  I  hope  you  will  feel  warranted  in  putting  the 
same  advice  to  your  various  interests  so  that  no  mistake  will  occur. 

A  concrete  example  of  the  activities  of  the  manufacturers  in  rais- 
ing the  price  of  lath  is  shown  by  a  series  of  letters.  Mr.  Hines  wrote 
Secretary  Rhodes  on  December  20,  1916,  as  follows: 

In  regard  to  the  price  of  Yellow  Pine  lath,  for  the  life  of  me  I  cannot  under- 
stand why  the  price  of  all  southern  woods  in  lath  should  not  be  materially  ad- 
vanced, and  I  think  this  is  a  subject  that  should  have  a  special  committee  in- 
vestigation and  report.  Take  for  instance  the  trade  south  of  the  Great  Lakes, 
it  is  either  Cypress  or  Yellow  Pine  and  the  amount  of  lath  produced  in  the 
north  is  becoming  insignificant  and  largely  used  in  the  territory  from  Chicago 
north,  along  the  Great  Lakes,  and  through  Iowa,  Wisconsin,  and  Michigan. 
We  are  making  very  little  effort  to  sell  our  lath  south  of  that  from  the  north. 
Our  base  price  f.  o.  b.  Minneapolis,  is  $4.50  for  #1  W.  P.,  $4.25  for  #1  Norway, 
,  $4.25  for  #2  Mixed  and  for  the  so  called  #3  about  $3.25  to  $3.50.  Take  for 
instance,  Columbus,  Ohio, — 20^  from  Minneapolis  at  500  Ibs.  would  mean  $1.00 
per  thousand  added  to  the  above  prices  delivered.  As  I  understand  the  price 
of  Yellow  Pine  is  about  $2.25  at  the  mills,  kiln-dried,  weighing  about  500  Ibs, 
in  the  same  relative  territory  say  from  26  to  30^  rate,  or  $1.50  freight  would 
make  it  about  $3.75  delivered  or  $1.75  per  thousand  less  than  our  #1  White 
Pine. 

This  awful  difference  is  almost  criminal,  and  nothing  else  can  come  in 
that  territory  in  competition.  I  tried  sometime  ago  to  have  Mr.  Dowman 
increase  the  price  of  Cypress  but  was  unsuccessful  he  stating  that  he  had  to 
keep  the  price  as  it  was  to  offset  the  price  on  other  lath. 

I  think  the  Yellow  Pine  people  should  cooperate  with  the  Cypress  people 
and  make  a  substantial  increase  in  lath,  say  50^  to  $1.00  per  thousand. 

On  the  same  date  Mr.  Hines  also  wrote  R.  H.  Downman,  of  New 
Orleans,  the  leading  cypress  manufacturer,  urging  that  the  cypress 
people  also  advance  the  price  of  lath.  He  said : 

Note  attached  copy  of  letter  to  Mr.  Rhodes;  briefly  this  gives  you  my  idea 
of  the  conditions.  Don't  you  think  you  could  place  this  in  the  proper  channel, 
whoever  looks  after  this  for  the  Cypress  people,  whereby  through  some  co- 
operation, a  tremendous  advance  could  be  effected,  and  there  surely  never  was 
a  time  when  we  needed  it  worse  than  at  the  present. 

You  understand  I  am  not  complaining  about  the  Pine  situation  at  all  as  we 
are  sold  way  ahead,  all  we  can  produce  in  the  north  to  supply  our  trade,  but 
as  a  Yellow  Pine  operator,  we  are  selling  our  Jath  at  $1.00  per  thousand  less 
than  facts  and  conditions  warrant.  It  is  up  to  the  Yellow  Pine  and  Cypress 
people  to  get  together  on  this  and  I  shall  be  very  glad  to  do  anything  I  can 
to  co-operate. 

Under  date  of  December  27,  1916,  Mr.  Hines  wrote  Mr.  J.  S.  Foley 
and  some  six  other  prominent  yellow-pine  operators,  with  regard  to 
an  increase  in  the  price  of  yellow-pine  lath  to  make  it  more  com- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  13 

mensurate  with  the  price  being  obtained  for  white-pine  lath.  After 
pointing  out  the  rather  marked  difference  in  the  prices  being  secured 
for  the  two  kinds  of  lath,  Mr.  Hines  went  on  to  say : 

Don't  you  think  this  is  a  subject  that  should  call  for  some  thought,  and  if 
on  investigation  you  would  find  the  above  to  be  the  facts,  that  something 
should  be  done  whereby  you  would  realize  somewhere  near  what  they  are  worth? 
There  is  practically  nothing  in  them  comparatively  speaking,  at  the  mill. 

I  am  sure  the  Cypress  people  have  not  been  properly  advised  or  they  would 
have  advanced  their  price  sometime  ago,  and  no  doubt  by  taking  this  matter 
up  and  investigating  the  merits  of  it,  a  reasonable  price  could  be  arrived  at 
which  would  more  than  pay  for  the  cost  of  such  investigation.  I  would  be 
very  glad  to  have  you  take  the  matter  up  %nd  give  it  some  thought.  I  am 
writing  along  the  above  lines  to  Messrs.  M.  B.  Nelson,  Frank  Wisner,  W.  H. 
Sullivan,  John  Kaul,  J.  F.  Bonner,  F.  W.  Reimer,  and  J.  S.  Foley. 

Some  of  the  parties  whom  Mr.  Hines  addressed  mentioned  either 
the  prejudice  of  lathers  in  favor  of  white  pine  lath  or  the  lack  of 
kiln-drying  facilities  among  the  yellow  pine  manufacturers.  Mr. 
Frank  G.  Wisner  of  Eastmen-Gardiner  &  Co.,  went  somewhat  further 
in  his  reply  to  Mr.  Hines,  stating  under  date  of  January  1,  1917 : 

I  have  handed  your  letter  to  Mr.  P.  S.  Gardiner,  who  is  one  of  the  directors 
of  the  Southern  Pine  Association,  and  suggested  to  him  that  the  matter  be 
taken  up  with  the  Association  Committee  on  lath  looking  to  the  manufacture  of 
a  more  uniform  grade  and  for  the  proper  consideration  of  other  phases  of  the 
subject  and  the  giving  to  the  members  generally  the  benefit  of  the  investigation. 

Writing  to  Mr.  Hines  on  January  8,  1917,  Mr.  Foley  said : 

I  appreciate  your  suggestion  and  criticism  on  the  lath  question. 

If  we  were  able  individually,  to  bring  about  a  higher  price,  you  can  readily 
understand  that  we  would  not  hesitate  to  provide  storage  room  for  our  lath. 
Unless  all  of  the  manufacturers  of  Yellow  Pine  lath  would  look  at  it  from  the 
same  view  point,  we  would  be  obliged  to  take  the  going  market  price.  There 
is  very  little  different  condition  obtaining  in  Yellow  Pine  lath  or  Yellow  Pine 
lumber.  You  know  that  Yellow  Pine  has  been  a  treacherous  wood  and  we 
presume  will  continue  to  be  so  at  times  when  there  is  no  active  market  as  at 
the  present  moment. 

We  believe  that  considerable  good  will  result  from  the  thought  expressed 
in  your  first  letter.  We  at  least  hope  so. 

Mr.  Hines  also  took  the  matter  up  with  Secretary  Rhodes,  of  the 
Southern  Pine  Association,  as  will  be  noted  from  the  following  letter 
of  Mr.  Rhodes,  to  Mr.  Foley  under  date  of  January  12, 1917 : 

Mr.  Hines  has  sent  me  copies  of  correspondence  with  you  regarding  his  views 
of  handling  lath.  Mr.  Axley,  of  Warren,  Arkansas,  is  chairman  of  our  lath 
Committee  and,  as  you  know,  covered  the  matter  very  fully  in  reports  which  he 
has  presented  to  the  last  two  general  meetings.  I  have  requested  him  to  repeat 
the  subject  in  a  report  at  the  coming  annual  meeting.  Mr.  Axley  has  gone 
very  fully  into  the  same  and  I  fear  feels  that  the  manufacturers  have  not 
been  sufficiently  interested  in  his  recommendations.  No  doubt  you  will  attend 
our  annual  meeting,  and  I  hope  you  will  be  willing  to  take  part  in  the  dis- 
cussion on  this  subject  when  it  is  presented  by  Mr.  Axley. 


14  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

This  association  can  have  nothing  to  do  with  the  price  of  lath,  but  we  arc 
seeking  to  overcome  the  prejudice  which  exists  against  it  in  the  Chicago  Market, 
and  the  manufacturers  will  have  to  improve  their  methods  if  they  want  to  hold 
that  market. 

The  contrast  between  the  scope  of  the  movement  as  outlined  by  Mr. 
Rhodes  and  as  originated  by  Mr.  Hines  is  worthy  of  note. 

The  facts  as  to  a  shortage  of  other  kinds  of  lath  and  no  excess  sup- 
ply of  yellow  pine  lath  seem  to  have  been  brought  out  at  the  February, 
1917,  annual  meeting  of  the  Southern  Pine  Association  and  to  have 
been  responsible  for  an  increase  of  20  cents  per  thousand  in  the  prices 
of  Eastman,  Gardiner  &  Co.,  of  Laurel,  Miss.  This  is  indicated  by  a 
circular  letter  of  February  9,  1917,  issued  by  the  company  "to  all 
salesmen,"  but  copy  of  which  reached  the  files  of  the  Standard  Lum- 
ber Co.  of  Live  Oak,  Fla.  It  read : 

Upon  my  return  from  New  Orleans,  where  I  attended  the  annual  meeting  of 
the  Southern  Pine  Association,  I  find  that  our  order  file  on  #1  Lath  has 
increased  to  a  total  of  forty-six  cars,  now  on  our  books,  or  as  many  as  we  can 
ship  by  April  1st. 

For  shipment  after  April  1st,  you  may  send  us  orders  for  up  to  five  cars,  on 
basis  of  $2.50  per  thousand  fob  our  mill.  This  is  an  advace  of  20^  per  thou- 
sand over  our  February  1st  list. 

There  is  a  great  scarcity  of  Hemlock,  Spruce,  Pine  and  other  Lath,  and  not  a 
surplus  of  Yellow  Pine  lath ;  hence,  we  believe  you  will  find  sale  for  a  few 
cars  at  the  advanced  price. 

Kindly  acknowledge  receipt  of  this  letter. 

A  copy  of  the  above  circular  was  also  found  in  the  files  of  the 
Arkansas  Soft  Pine  Bureau,  a  statistical  exchange  affiliated  with  the 
Southern  Pine  Association,  at  Malvern,  Ark.  Mr.  C.  J.  Mansfield, 
vice  president  of  the  Arkansas  Lumber  Co.,  of  Warren,  Ark.,  imme- 
diately notified  his  company  to  raise  the  price  of  lath  to  $2.50  per 
M.,  as  shown  by  the  following  letter  of  February  12,  1917: 

From  the  best  information  I  have  been  able  to  get  it  is  my  judgment  that 
our  No.  1  lath  are  worth  $2.50  per  thousand  in  straight  cars  and  $2.50  for  end 
loading.  Have  wired  you  to  that  effect  as  shown  by  enclosed  confirmation. 

Please  make  these  prices  effective  immediately  upon  receipt  of  information. 

On  the  same  day  Mr.  Mansfield,  as  president  of  the  Arkansas  Soft 
Pine  Bureau,  wrote  A.  Trieschman,  of  the  Crossett  Lumber  Co.,  and 
to  nine  of  the  other  principal  Arkansas  manufacturers,  referring  to 
the  action  of  Eastman  Gardiner  &  Co.  as  well  as  his  own  action,  as 
follows : 

For  your  information  wish  to  call  your  attention  to  copy  of  letter  sent  out  by 
the  sales  department  of  Eastman  Gardiner  &  Co.  under  date  of  February  9th. 
You  will  note  thai  they  have  made  a  material  advance  on  the  price  of  their 
lath,  which  are  long  leaf. 

For  your  further  information  will  call  your  attention  to  copy  of  letter  which 
I  have  written  the  same  department  of  our  Warren  office  which  expresses 
my  views  with  reference  to  the  value  of  Arkansas  Soft  Pine  Lath. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  15 

Price  actirities  during  war  period. 

The  following  data  is  illustrative  of  the  activities  of  the  southern 
pine  manufacturers  during  this  period.  On  October  8,  1917,  Mr. 
Edw.  Hines  sent  out  telegrams  from  Chicago  to  a  large  number  of 
manufacturers  as  follows: 

Would  like  to  have  you  attend  conference  Friday  twelfth  here  meet  selected 
number  yellow  pine  operators  discuss  questions  higher  costs  production  lumber 
operating  conditions  present  general  conditions  several  operators  have  sug- 
gested such  conference  also  suggest  your  asking  few  other  leading  operators 
your  vicinity  answer  who  will  be  present. 

Mr.  J.  S.  Foley,  of  the  Brooks-Scanlon  Lumber  Co.,  throws  further 
light  on  the  real  author  of  these  telegrams  when  he  wrote  on  October 
10, 1917,  as  follows : 

All  of  the  larger  mills  through  this  section  received  telegrams  yesterday 
signed  by  Edward  Hines,  but  in  reality  it  is  from  Mr.  Rhodes,  who  Is  now  in 
Chicago  and  wants  a  conference  of  the  manufacturers  to  discuss  the  question 
of  higher  costs  of  production,  lumber  operating  conditions  and  present  general 
conditions  of  the  market. 

The  conditions  that  confront  us  today  is  such  that  we  consider  it  very 
important,  and  are  very  much  in  hopes  that  it  will  be  convenient  for  Mr. 
Scanlon  to  attend. 

No  doubt  the  West  Coast  condition  has  a  direct  bearing  on  what  we  find 
is  confronting  Yellow  Pine  and  the  Government's  attitude  toward  the  mills 
who  were  not  cutting  the  ship  schedules,  a  small  amount  of  business  being 
booked,  that  we  consider  a  conference  would  result  in  a  great  deal  of  good, 
and  for  that  reason  the  writer  has  decided  to  attend. 

Mr.  F.  W.  Pettibone,  Mississippi  manager  of  the  Edward  Hines 
yellow  pine  interests,  wrote  one  of  his  salesmen  on  October  15,  1917, 
in  part: 

There  was  a  meeting  of  mill  men  in  Chicago  Friday,  and  think  there  will  be 
a  decided  stiffening  in  the  market  very  shortly. 

On  October  18, 1917,  Mr.  Chas.  S.  Keith  issued  a  circular  addressed 
"To  all  salesmen"  which  was  circulated  rather  widely  among  all 
manufacturers,  and,  in  which  Mr.  Keith  expressed  the  opinion  that 
the  bearish  condition  of  the  yellow  pine  market  was  purely  psycho- 
logical. In  this  circular  he  added : 

The  fact  is  that  this  conviction  has  resulted  in  an  unjustified  reduction  in 
values,  and  has  had  the  tendency  to  check  buying  and  encourage  stock  re- 
ductions on  the  part  of  the  retailer  who  does  not  desire  to  go  into  the  year 
with  stocks  of  lumber  which  have  reduced  in  value. 

After  discussing  the  statistical  strength  of  the  market,  as  shown  by 
the  association  reports,  he  said : 

I  have  noticed  a  decided  strengthening  in  the  market  in  the  last  10  days, 
responding  to  the  fact  that  more  lumber  is  now  being  sold  than  produced,  or 
shipped. 


16  LUMBER   MANUFACTURERS '  TRADE  ASSOCIATIONS. 

He  closed  his  circular  as  follows : 

This  analysis  would  seem  to  justify  the  final  conclusions  that  instead  of  lum- 
ber prices  being  lower,  the  prospects  are  that  they  will  advance;  but  profits 
may  be  less  by  reason  of  increasing  costs  of  production. 

It  appears  that  a  further  meeting  was  arranged  for  October  23, 
1917.  With  reference  to  this  meeting  Mr.  F.  W.  Pettibone  wrote,  on 
October  25, 1917,  as  follows : 

Referring  to  your  wire  relative  to  the  price  situation,  at  the  meeting  in  Mem- 
phis Tuesday  this  situation  was  thoroughly  gone  into.  Some  new  price  lists  are 
now  out  advancing  prices.  Think  the  market  is  going  to  firm  up,  especially  on 
dimension,  and  you  had  better  go  along  on  the  basis  you  have  been  working  on, 
try  our  dimension  at  about  $1.00  off  list  as  a  general  average.  Would  not  let 
an  order  get  away,  would  take  it  at  the  price  you  have  been  selling  at  a  last 
resort,  but  talk  higher  prices  all  the  time. 

Enclosed  herewith  Southern  Pine  report  No.  122.  You  will  note  that  the 
orders  are  in  excess  of  production  and  also  in  excess  of  shipments  but  it  is  in 
excess  of  shipments  on  account  of  the  car  shortage  in  some  localities. 

The  meeting  at  Memphis  developed  the  fact  that  50%  of  the  yellow  pine 
lumber  on  hand  is  sold,  and  that  the  stocks  are  four  hundred  million  feet 
lower  than  they  were  a  year  ago.  This  opened  the  eyes  of  many  mill  men  who 
have  been  making  low  prices,  and  it  is  bound  to  stiffen  the  market. 

Mr.  Edward  Hines  prepared  an  office  memorandum  for  his  sales 
manager,  W.  B.  Vanlandingham,  referring  to  this  meeting  as  follows : 

Confidentially  regarding  the  Memphis  meeting,  it  was  surprising  on  a  careful 
diagnosis  of  the  situation  how  everyone  appreciated  that  they  were  selling  lumber 
for  less  than  cost  of  getting  it  out,  and  warranted  everyone  advancing.  I  am 
confident  that  Yellow  Pine  will  be  advanced  two  or  three  dollars  per  thousand. 
A  committee  was  appointed  to  go  to  Washington  to  raise  prices  to  the  Govern- 
ment. Keep  this  to  your  self  and  consider  it  strictly  confidential. 

The  annual  meeting  of  the  Southern  Pine  Association  was  held 
February  18, 1918.  In  arranging  for  this  meeting  Mr.  W.  H.  Sullivan, 
manager  of  the  Great  Southern  Lumber  Co.,  wrote  Mr.  Keith,  as 
president  of  this  association,  on  January  24, 1918,  as  follows : 

In  connection  with  the  meeting  of  the  Association  in  February,  would  like  to 
suggest  that  at  least  part  of  the  session  be  taken  up  with  a  program  similar  to 
one  that  we  had  at  Memphis,  which  resulted  in  so  much  benefit  for  the  whole 
industry.  Would  suggest  that  we  get  the  same  men  to  make  talks  at  the  New 
Orleans  meeting  as  spoke  at  Memphis :  yourself  followed  by  Mr.  Hines  and  Mr. 
Scanlon. 

Have  been  going  into  the  situation  carefully  and  believe  that  perhaps  we  are 
not  on  a  high  enough  average  price  basis  as  yet,  considering  the  advance  in  the 
cost  of  labor  and  supplies,  to  bring  us  a  proper  return  for  stumpage,  and  think 
some  very  effective  work  along  this  line  could  be  accomplished  at  the  meeting 
in  New  Orleans.  Would  be  glad  to  hear  from  you  on  the  subject. 

Mr.  Keith  made  reply  under  date  of  January  28,  in  part,  as  fol- 
lows: 

Replying  to  yours  of  the  24th  inst.  I  was  in  hopes  that  you  would  come  to 
the  conclusion  of  holding  this  meeting  prior  to  the  meeting  of  the  Association 


LUMBER  MANUFACTURERS '   TRADE  ASSOCIATIONS.  17 

in  New  Orleans,  by  holding  it  in  Memphis  two  weeks  before.  I  believe  we  coulct 
accomplish  more  by  this  procedure.  So  many  committees  will  have  to  be  heard 
from  that  it  will  consume  much  time,  but  so  far  as  this  is  concerned  I  am  will- 
Ing  to  do  any  thing  in  this  matter  that  you  want  to  do. 

In  this  connection  I  want  to  make  a  suggestion  that,  while  I  have  the  greatest 
respect  for  Mr.  Hines,  and  his  information  is  always  good,  I  believe  we  ought 
to  ask  him  that  in  making  his  talk  he  should  bear  in  mind  that  any  action  in 
New  Orleans  will  probably  be  under  the  eye  of  Government  agents  and  our  dis- 
cussions should  not  take  to  lines  of  suggestion  and  advice  to  our  people  that  they 
should  do  anything  that  might  be  construed  by  a  court  or  unfriendly  element  as 
being  an  effort  to  control  prices  and  output  for  the  purpose  of  defeating  the  aims 
and  purposes  of  Federal  or  State  Antitrust  laws.  Mr.  Hines  has  only  one  fault, 
and  that  is  that  his  courage  is  greater  than  this  caution. 

Incidentally,  Mr.  Hines  wrote  Mr.  Keith  on  the  same  day,  as  fol- 
lows : 

I  read  at  home  yesterday,  your  letter  of  January  16th  to  the  Salesmen,  and  I 
thoroughly  appreciate  the  tremendous  strong  showing  you  make.  As  explained 
to  you  when  here,  however,  I  feel  that  a  lot  of  these  things  are  lost  in  the  main 
before  they  reach  the  fountainheads.  The  real  principals  do  not  sit  down  and 
carefully  diagnose  these  things,  and  those  who  do,  sometimes  seek  to  take  a 
temporary  advantage  by  pushing  their  particular  stock  at  some  concessions, 
th'nking  they  will  have  the  stock  sold,  and  have  a  smaller  stock  when  conditions 
change.  We  recently  had  a  little  instance  of  that  sort  by  a  concern  who  had 
some  cars  in  transit,  a  very  large  operator,  who  stated  that  they  had  some  cars 
on  the  way  but  could  not  go  farther  on  account  of  the  embargo. 

To  my  mind,  as  explained  to  you  here,  if  five  or  six  strong  characters  like 
yourself,  from  different  sections,  could,  at  the  annual  meeting  have  some  definite 
data  prepared  and  make  some  extemporaneous  remarks,  explaining  the  data 
and  the  force  that  should  be  given  to  accomplish  results,  it  would  be  a  splendid 
thing. 

Mr.  Hines  then  went  on  to  criticise  pessimistic  discussion  at  the 
association  meetings: 

We  should  cut  out  a  lot  of  this  academic  discussion  particularly  from  Gov- 
ernment officials,  as  unfortunately  it  results  in  a  great  deal  of  harm  in  the 
minds  of  a  lot  of  the  members  present,  as  coining  from  some  representative  of 
the  Government  they  feel  it  is  absolutely  based  upon  facts ;  then  such  discus- 
sions are  given  publicly  as  being  a  part  of  the  proceedings  of  our  meeting 
and  giving  the  impression  that  we  are  in  full  accord  with  such  recommenda- 
tions like  for  instance  the  speech  of  Mr.  Greeley  a  year  ago. 

The  desirability  of  careful  censorship  of  the  meetings  was  then 
touched  upon  by  Mr.  Hines  : 

I  believe  at  a  meeting  of  such  importance  as  the  Yellow  Pine  manufacturers 
nothing  should  be  given  out  without  first  carefully  censoring  it.  I  hope  there- 
fore that  you  will  give  this  serious  consideration  and  work  with  Mr.  Rhodes 
to  accomplish  that  purpose.  You  only  get  these  fellows  together  once  a  year 
which  I  also  think  is  a  mistake,  as  to  my  mind  the  association  should  get 
together  every  three  months,  and  a  selected  number  should  then  sit  down 
beforehand  and  carefully  diagnose  what  to  discuss  and  what  thoughts  to  dwell 
upon. 


18  LUMBER  MANUFACTURERS '  TRADE  ASSOCIATIONS. 

The  nature  of  Mr.  Hines's  thoughts  and  intentions  with  regard 
to  southern  pine  is  disclosed  not  only  by  the  story  of  his  activities 
throughout  the  year  1917  and  the  above  quotations,  but  by  his  obvious 
desire  to  cooperate  with  Mr.  Keith  in  bringing  about  organization 
among  the  yellow-pine  men  similar  to  that  in  operation  in  the  north- 
ern pine  and  hemlock  districts.  He  closed  his  letter  of  January  28 
to  Mr.  Keith  as  follows : 

Do  you  anticipate  being  in  Chicago  before  the  annual  meeting?  I  would 
really  like  to  sit  down  with  you  for  about  an  hour  and  go  over  some  of  these 
matters  to  see  if  we  cannot  shape  up  something  that  will  bring  good  results. 

I  enclose  copy  of  letter  I  have  written  Mr.  Chisholm  of  the  Shevlin-Carpenter 
Company,  Minneapolis.  The  so-called  Broughton  list  has  been  a  sort  of  guide 
in  general  for  the  Pine  manufacturers  for  many  years  but  recently  is  behind 
the  procession.  You  can  see  that  I  am  trying  to  awaken. 

There  will  be  a  meeting  of  the  Northern  Hemlock  &  Hardwood  Mfgrs.  Asso- 
ciation this  week  at  Milwaukee,  and  it  will  certainly  be  a  pleasure  for  me 
to  attend  because  they  are  all  working  for  the  common  good  of  all.  The  pub- 
licity they  give  out  once  a  month  brings  about  wonderful  results. 

Mr.  L.  B.  Chipman,  manager  of  the  export  department  of  the 
Long-Bell  Co.,  commented  upon  the  1918  annual  meeting  of  the  asso- 
ciation as  follows: 

As  per  your  request  of  February  2nd,  the  writer  attended  the  Association 

meeting  in  New  Orleans  this  week. 

******* 

Hines  was  present,  giving  the  story  of  his  life  from  1880  to  date  as  usual, 
having  with  him  a  raft  of  orders,  telegrams,  et  cetera,  giving  the  price  being 
obtained  for  Northern  woods,  pointing  out  that  pine  is  not  selling  within  $5.00 
per  M.  of  what  it  should ;  that  the  price  to  the  Government  should  be  advanced 
by  this  sum,  etc.  All  of  this  was  included  in  his  address  before  the  Associa- 
tion after  which  on  the  following  day  he  butted  into  our  Bureau  meeting  giving 
us  an  additional  hour  of  advice  and  criticism,  following  which,  I  understand, 
He  acted  similarly  in  a  meeting  being  held  by  Mr.  Long,  Chas.  Keith  and 
others. 

From  the  action  of  Mr.  Keith  I  take  it  that  he  believes  somewhat  in  the 
position  taken  by  Mr.  Hines,  he  not  being  satisfied  with  the  prices  obtained  to 
date. 

*  *  *          .       *  *  *  * 

A  Committee  will  visit  Washington  early  in  March  in  an  effort  to  secure 
increased  prices  through  the  Commission  as  above  suggested,  and  Mr.  Sullivan 
insists  upon  the  writer  joining  them,  putting  it  up  to  me  to  establish  the  export 
prices  agreed  upon  in  our  meeting  as  per  the  attached.  While  these  prices  are 
the  best  we  could  agree  upon  at  this  meeting,  they  are  inconsistent  and  in  many 
instances  unreasonable,  and  I  stated  that  I  held  no  hopes  of  sustaining  such 
figures.  That  we  should  be  obliged  to  accept  some  changes  I  was  quite  sure. 

This  association  meeting  was  held  in  New  Orleans  the  week  of 
February  18.  On  February  19,  Mr.  S.  B.  Bissell,  of  the  Wausau- 
Southern  Lumber  Co.,  of  Laurel,  Miss.,  telegraphed  from  New  Or- 
leans to  Mr.  A.  J.  Glassow,  at  Milwaukee,  as  follows: 


LUMBER  MANUFACTURERS '   TRADE  ASSOCIATIONS.  19 

Effective  immediately  please  advance  every  item  in  list  one  dollar  this  in- 
crease will  only  put  us  in  line  with  other  leading  mills  and  will  probably  be 
soon  followed  by  a  revision  of  entire  list  carrying  additional  changes  lumber 
production  this  year  from  all  fields  will  be  far  short  of  year  nineteen  seventeen 
and  demand  will  probably  be  equally  as  great  continually  increasing  costs 
justify  material  price  advances  Stop  Cancel  all  outstanding  quotations  Stop 
Not  anxious  for  great  amount  of  business  even  at  corrected  prices. 

At  this  association  meeting  Mr.  L.  C.  Boyle  delivered  an  address, 
in  which  he  stated : 

What  is  the  present  understanding?  An  understanding  that  has  been 
achieved  largely  by  Charlie  Keith ;  an  understanding  that  he  has  worked 
for — and  I  don't  say  this  to  flatter  him,  or  because  he  is  my  friend;  I  say  it 
in  justice  to  him  as  one  of  your  co-workers.  His  philosophy  has  been  this : 
That  if  you  men  will  get  together  and  will  know  your  cost,  and  will  come  to 
a  legitimate  basic  market  understanding  of  your  stumpage  values,  you  can 
take  your  cost  and  your  stumpage  and  add  them  together  and  you  have  got 
the  base  line  of  your  prices.  Your  price  below  that  base  line  is  loss;  above 
it  is  profit.  Now,  we  can't  go  above  that  by  any  agreement,  but  he  supple- 
ments his  thought  with  this  other  perfectly  legitimate  activity.  Knowing  our 
costs,  and  having  a  common  understanding  of  the  market  value  of  stumpage, 
if  we  had  some  way  of  publishing  our  processes  to  the  world,  just  as  the 
farmer  has  his  price  published  for  his  wheat,  his  grain,  his  hogs  or  his  cattle, 
so  that  all  farmers  know  the  price  of  wheat,  so  that  all  farmers  know  the 
current  movement  of  cattle — if  we  could  only  find  some  way  of  getting  that 
information  to  all  of  us,  that  would  be  helpful ;  it  would  be  instructive,  and 
have  a  stabilizing  influence.  There  is  no  illegality  in  stability.  Your  price 
may  approximate  mine,  but  it  is  in  the  way  we  reach  it. 

Further  light  is  thrown  on  the  activities  of  Mr.  Hines  toward 
securing  an  advance  in  price  for  lumber  in  a  letter  from  Mr.  M.  B. 
Nelson,  general  sales  manager  of  the  Long-Bell  Lumber  Co.,  to  his 
assistant,  Mr.  Beebe,  March  5,  1918,  in  which  he  wrote  in  part: 

Mr.  Edward  Hines  was  in  the  office  Saturday  afternoon,  and  had  quite 
a  long  talk  with  him  relative  to  prices  being  secured  by  manufacturers  of 
other  woods,  and  he  claimed  that  the  Yellow  Pine  manufacturers  have  noth- 
ing to  fear  in  the  way  of  competition  from  any  other  wood  at  this  time,  and 
insisted  that  it  would  be  an  easy  matter  to  get  a  higher  price  for  Yellow 
Pine  if  the  manufacturers  only  realized  it.  I  understand  it  is  along  these 
lines  that  he  talked  before  the  committee  and  the  meeting  in  New  Orleans 
recently,  so  you  may  know  about  it.  He  showed  me  copies  of  hundreds  of 
orders  which  they  had  booked  for  white  pine,  Norway  Pine,  Hemlock,  Birch, 
Beech,  etc.,  and  also  contract  with  industrial  companies  for  shipment  through- 
out the  year. 

*  *  *  *  *  *  * 

I  would  also  like  you  to  compare  the  figures  Mr.  Hines  has  furnished  as  to 
the  selling  price  of  the  different  items  in  the  different  markets,  with  our 
prices,  and  let  me  have  the  information  together  with  information  as  to 
the  prices  of  other  woods  based  on  any  data  you  have. 

During  the  year  1918  the  War  Industries  Board  concluded  that 
it  was  necessary  to  fix  maximum  prices  at  which  southern  pine  lum- 


20  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

her  should  be  sold.  Some  light  upon  the  necessity  for  this  action  is 
shown  in  the  letter  of  Mr.  H.  T.  Kendall,  sales  manager  of  the  Kirby 
Lumber  Co.,  to  Mr.  Ray  Wiess,  under  date  of  May  2,  1918,  in  which 
he  wrote  in  part : 

Note  your  letter  of  the  27th  referring  to  inquiries  you  receive  from  retail 
and  wholesale  dealers  in  the  East,  for  material  which  they  state  is  for  the 
Government. 

It  is  impossible  to  say  at  this  time  just  what  further  instructions  we  will 
receive  regarding  the  handling  of  Government  business.  We  have  been  de- 
clining to  quote  dealers  on  these  inquiries  for  sometime,  as  under  the  present 
ruling  if  we  booked  an  order  from  a  dealer  for  material  which  was  going  to 
the  Government,  we  might  be  forced  later  on  to  change  the  prices  to  agree  with 
the  Government  maximum  list.  These  Government  prices  are  so  much  lower 
than  the  regular  commercial  market,  that  we  of  course  do  not  want  to  take 
any  more  than  our  share  of  the  orders,  and  these  we  are  of  course  getting 
through  the  Southern  Pine  Emergency  Bureau.  There  is  to  be  a  meeting  in 
New  Orleans  today  and  tomorrow  for  the  purpose  of  discussing  the  manner 
of  handling  orders  for  the  Government,  and  perhaps  some  definite  plan  will 
be  outlined  at  this  meeting. 

As  you  have  probably  heard  there  is  also  some  talk  regarding  the  Govern- 
ment fixing  maximum  prices  to  the  trade  the  same  as  they  have  on  Government 
and  railroad  requirements,  but  the  general  opinion  seems  to  be  that  it  will  be 
extremely  difficult  to  put  such  an  arrangement  as  this  into  effect. 

The  Southern  Pine  Emergency  Bureau  issued  a  circular  per- 
taining to  the  same  matter  under  date  of  May  4,  1918,  as  follows : 

The  purpose  of  the  Committee  was  to  consider  the  proposal  of  Acting  Lumber 
Director  Edgar  that  the  price  of  Southern  Pine  to  the  Government  be  adjusted 
and  be  made  the  maximum  to  the  dealer  serving  the  consumer.  The  sentiment 
of  the  meeting  was  that  if  the  manufacturers  would  improve  their  service 
to  the  Government  through  more  active  cooperation  with  the  Bureau  that  the 
Government  would  not  be  anxious  to  further  consider  fixing  a  price  that  the 
manufacturers  might  charge  the  dealer. 

*****  *  * 

In  order  to  secure  greater  cooperation  from  the  Manufacturers,  it  was  unani- 
mously agreed  that  a  wire  request  be  sent  at  once  to  all  mills,  therefore,  we 
wired  yesterday  every  manufacturer  that  has  been  taking  Government  business 
from  us  as  follows: 

Southern  pine  manufacturers  representing  approximately  three  hundred  mills 
yesterday  in  this  city  unanimously  pledged  their  stocks  and  facilities  in  order 
that  Government  lumber  needs  shall  have  preference  over  commercial  orders 
and  they  earnestly  request  all  mills  in  the  interest  of  the  Government  whether 
satisfied  with  price  or  not  to  patriotically  do  the  same  by  promptly  acknowledg- 
ing receipt  of  this  wire  and  trust  to  the  fairness  of  the  Government  to  do 
justice  in  the  end  and  wish  to  request  that  immediate  attention  be  given  to 
all  orders,  inquiries  and  requests  for  stock  information  when  received  from 
Southern  Pine  Emergency  Bureau. 

Maximum  prices  were  fixed  and  became  effective  June  15,  1918. 
The  method  of  arriving  at  these  prices  was  described  by  Mr.  R.  H. 
Downman,  who  wrote  on  April  5,  1919,  to  Mr.  E.  A.  Self  ridge,  as 
follows : 


LUMBER  MANUFACTURERS '   TRADE  ASSOCIATIONS.  21 

You  will  remember  that  the  price  on  yellow  pine  was  fixed  at  $26.50  base  or 
average  price,  and  as  a  reasonable  return  to  them  according  to  their  own 
figures  of  costs  which  had  been  found  on  their  books  by  the  reports  of  the 
Federal  Trade  Commission  and  it  was  raised,  $1.50  per  thousand,  and  to  $28.00 
base  or  average  price,  to  enable  them  to  pay  30  cents  per  hour  for  common 
labor.  Some  of  the  yellow  pine  mills  did  give  this  30  cents  per  hour,  others 
did  not.  I  am  speaking  now  of  the  larger  operations.  There  were  few,  if  any, 
of  the  host  of  smaller  mills  that  did  pay  more  than  $2.00  per  day  and  most 
of  these  operations  were  based  on  11  hours,  even  some  of  them  12  hours.  *  *  * 

Mr.  M.  J.  Scanlon,  one  of  the  committee  representing  the  southern 
pine  lumber  manufacturers,  referred  to  Government  price  fixing 
in  his  letter  of  June  20,  1918,  as  follows: 

Confirming  my  wire  of  last  night  will  say  that  we  agreed  with  the  Govern- 
ment on  prices  for  lumber  for  Government  and  Commercial  use  on  the  follow- 
ing basis  B  &  Better  $4.00,  all  grades  of  No.  1,  2,  3,  and  4  Common  boards  and 
strips  $5.50,  all  grades  of  2"  dimension  $4.00,  all  three  inch  and  larger  plank 
and  timbers  $5.00  per  M.  On  the  latter  item  $2.00  per  M.  extra  when  furnished 
in  Long  Leaf  Yellow  Pine.  Above  prices  are  in  advance  of  the  present  Govern- 
ment list  and  applies  not  only  to  the  Government  orders  but  to  the  whole- 
salers and  retailers  as  well  when  sold  f.  o.  b.  cars  mill.  This  price  also  applies 
when  lumber  is  sold  to  our  allies  but  we  can  charge  citizens  of  allied  nations 
any  price  agreed  upon. 

Price  activities  in  post-war  period. 

Immediately  after  the  signing  of  the  armistice  a  general  meeting 
of  manufacturers  was  arranged  to  be  held  in  Chicago  on  November 
22,  1918.  At  the  meeting  it  was  decided  to  hold  to  the  Government 
maximum  prices  as  a  minimum  basis.  Mr.  E.  C.  Harrell,  secretary 
of  the  Georgia-Florida  Sawmill  Association,  wired  his  office  at  Jack- 
sonville, Fla.,  on  that  day  as  follows: 

CHICAGO,  ILL.,  Nov.  22,  1918. 

Large  number  attending  meeting  National  Association  here  today  and  wonder- 
ful optimism.  Production  approximately  sixty  per  cent  of  normal.  Stocks  at 
mills  and  yards  smaller  than  ever  before,  and  with  tremendous  domestic  and 
foreign  demand  manufacturers  will  demand  maximum  Governent  prices.  Our 
territory  will  soon  be  receiving  all  orders  they  can  handle,  particularly  railroad 
material. 

On  November  27,  1918,  Secretary  Harrell  issued  a  circular  letter 
giving  further  details  concerning  this  meeting.  This  circular  was 
in  part  as  follows : 

It  is  to  be  regretted  that  every  member  of  the  Georgia-Florida  Saw  Mill 
Association  and,  in  fact,  all  manufacturers  of  lumber,  could  not  have  been  at 
the  mass  meeting  held  in  Chicago  November  22ud  and  23rd  under  the  auspices 
of  the  National  Lumber  Manufacturers  Association. 

******* 

By  special  request  the  meeting  was  addressed  by  Mr.  George  M.  Reynolds, 
President  of  the  Continental  &  Commercial  National  Bank  of  Chicago,  the 
largest  banking  institution  west  of  New  York  City,  by  Judge  Edwin  H.  Parker, 
Priorities  Commissioner  of  the  War  Industries  Board,  and  by  Mr.  Harry  A. 


22  LUMBEK   MANUFACTURERS*  TRADE  ASSOCIATIONS. 

Wheeler,  President  of  the  National  Chamber  of  Commerce  of  the  United  States, 
in  the  order  named. 

******* 

Judge  Parker  expressed  as  his  opinion  that  there  would  be  no  maximum 
prices  any  longer  than  the  date  of  expiration  of  those  now  in  effect ;  that  per- 
sonally he  did  not  favor  a  maximum  price  list,  and  furthermore,  that  he  did 
not  think  this  would  be  necessary;  that  prices  would  be  regulated  altogether 
by  supply  and  demand,  and  so  far  as  the  latter  is  concerned,  his  information 
was  that  there  was  not  a  large  supply  of  lumber  on  hand,  and  that  production 
could  not  be  materially  increased  for  some  time  to  come;  and  that  the  lumber 
demand  would  tax  the  resources  of  the  lumber  manufacturers  for  a  long  time. 
******* 

There  were  expressions  of  optimism  as  were  possibly  never  heard  before ; 
manufacturers,  dealers,  both  wholesale  and  retail,  in  looking  forward  to  the 
greatest  business  that  has  ever  been  experienced.  The  manufacturers  reported 
smaller  stocks  than  for  many  years;  dealers,  that  there  were  no  stocks  to 
speak  of,  and,  in  fact,  it  was  stated  on  the  floor  that  yards  were  for  practical 
purposes,  swept  bare. 

Manufacturers  realize  that  it  is  a  physical  impossibility  to  produce  lumber 
for  less  costs  than  prevail  at  the  present  time,  and  Mr.  Long,  of  the  Long-Bell 
Lumber  Company,  expressed  the  sentiment  of  all  present,  that  the  manufacturers 
could  not  afford  it,  and  in  fact,  would  not  accept  a  lower  price  for  their  com- 
modity than  prevails  at  the  present  time. 

It  seemed  to  be  the  belief  of  the  Chicago  meeting  that  there  might  and 
possibly  would  be  a  short  period  of  inactivity,  the  Holiday  season  was  approach- 
ing and  that  buying  would  not  be  active  during  the  Holiday  and  Winter  season, 
also,  that  it  might,  be  a  season  of  marking  time,  and  that  within  a  few 
weeks  at  the  longest,  buying  would  become  of  sufficient  volume  to  satisfy  every 
one  provided  there  was  no  reduction  in  Government  maximum  prices;  if  price 
concessions  begin  by  the  manufacturer;  dealers  will  immediately  withhold 
buying  and  wait  until  there  are  still  further  reductions.  The  moral  of  this  is 
manifestly  clear. 

Mr.  E.  J.  Hurst,  sales  manager  of  the  J.  J.  Newman  Lumber  Co., 
of  Brook  Haven,  Miss.,  also  commented  upon  this  meeting  in  his 
letter,  dated  November  27,  1918,  in  part  as  follows : 

There  was  a  very  enthusiastic  meeting  in  Chicago,  and  regret  I  did  not  see 
you  there.  Everyone  feels  that  before  the  manufacturer  can  accumulate  any- 
thing like  a  normal  stock,  the  trade  situation  will  be  lined  up  in  some  definite 
shape  and  there  will  be  an  enormous  demand  for  lumber  before  many  months. 
It  would  seem  from  the  sentiment  developed  at  the  Chicago  meeting  that  the 
manufacturers  are  a  unit  on  the  policy  of  holding  their  stock  at  Government 
prices,  which  will  remain  in  effect  at  least  until  December  23rd,  and  that  there 
will  be  no  special  effort  to  book  orders  until  there  is  a  better  assortment  of  stock 
in  the  hands  of  the  manufacturers,  which  will  require  several  months,  as  stated 
in  your  letter,  and  in  the  meantime,  conditions  are  bound  to  right  themselves, 
and  there  will  be  plenty  of  business  for  all. 

When  maximum  prices  were  fixed  by  the  War  Industries  Board 
for  lumber  a  limitation  of  time  was  included  in  the  order.  The  order 
in  effect  at  the  time  of  the  armistice  expired  by  its  own  limitation 
on  December  23,  1918.  During  the  early  part  of  December,  of  that 
year,  the  various  lumber  manufacturers  exchanged  tentative  price 


LUMBEE  MANUFACTURERS'  TRADE  ASSOCIATIONS.  23 

lists  with  each  other.  It  was  arranged  to  hold  a  meeting  of  yellow 
pine  manufacturers  at  St.  Louis,  Mo.,  on  December  19,  1918,  under 
the  auspices  of  the  Southern  Pine  Association's  Committee  on  Sales 
and  Distribution. 

Mr.  Austin,  chairman  of  the  committee,  wrote  the  St.  Louis  office 
of  the  Pickering  Lumber  Co.  to  arrange  hotel  quarters  for  the  meet- 
ing and  added — 

As  stated  above,  I  expect  you  to  help  me  carry  the  burden  of  the  responsibility 
so  that  those  who  attend  will  not  be  escorted  to  jail  by  some  of  your  handsome 
St.  Louis  policemen  on  account  of  our  efforts  to  break  the  law. 

In  reply,  under  date  of  December  16,  the  St.  Louis  manager  stated 
that  the  Hotel  Statler  would  be  ready  for  the  meeting,  and  added: 

Why  would  it  not  be  a  good  idea  to  have  the  meeting  in  the  jail  to  start  with, 
then  you  would  not  have  to  bother  at  all. 

On  December  16  Secretary  Rhodes  issued  a  circular  to  each  member 
of  this  committee  in  part  as  follows : 

It  is  needless  to  emphasize  the  importance  of  many  subjects  to  be  consid- 
ered in  connection  with  the  future  market  conditions  and  trade  extension. 
These  will  all  be  discussed  at  a  meeting  of  the  Committee  on  Sales  and 
Distribution  which  has  been  called  by  Chairman  J.  H.  Austin  to  be  held  at 
Statler  Hotel,  St.  Louis,  Mo.,  Thursday,  December  19th,  beginning  at  10  A.  M. 

I  sincerely  trust  it  will  be  possible  for  you  to  be  present  and  know  you  will 
exert  every  effort  to  do  so. 

A  program  as  arranged  by  Mr.  Austin,  chairman  of  the  committee, 
included  the  following: 

General  discussion  of  those  in  attendance  regarding  present  conditions  and 
future  prospects  and  their  effect  upon  the  sale  and  distribution  of  our  product. 

Note. — This  discussion  to  be  carried  on  in  the  following  order:  M.  B. 
Nelson,  Geo.  E.  Townsend,  Harry  T.  Kendall,  C.  R.  Burgoyne,  O.  O.  Axley. 
M.  J.  Hale,  W.  M.  Beebe. 

Following  this  discussion  recommendations  will  be  accepted  by  the  Com- 
mittee covering  points  that  may  arise  in  the  future  which  will  effect  the 
sale  and  distribution  of  our  product. 

The  official  record  of  this  meeting  shows  that  among  those  present 
was  Mr.  W.  B.  Vanlandingham,  sales  manager  of  the  Edward  Hines 
Lumber  Co.,  of  Chicago.  On  the  day  of  the  meeting  Mr.  Vanland- 
ingham telegraphed  Edward  Hines  from  St.  Louis,  as  follows: 

Prices  advance  one  to  three  dollars  all  items  but  timber  no  changes  that 
item  send  Crowell  Spencer  purchase  two  five  three. 

Mr.  Vanlandingham  went  more  into  detail  concerning  this  meeting 
when  he  wrote  on  December  23,  1918,  as  follows : 

The  writer  attended  a   meeting  of  the   Sales  Managers  Committee  of  the 
Southern  Pine  Association  held  in  St.  Louis  last  Thursday,  and  it  developed 
that  all  those  in  attendance  reported  that  their  stocks  were  under  60  to  70% 
91321°— 22 3 


24  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

of  normal,  and  all  expect  to  advance  their  prices  on  the  23d,  that  is  to-day, 
the  advances  running  from  $1.00  to  $3.00  per  M.  on  all  items  with  the  excep- 
tion of  timbers  and  #3  Boards.  Timbers  are  considered  to  be  about  in  line 
with  the  demand.  #3  Boards  seem  to  be  in  surplus,  and  some  of  the  mills 
are  willing  to  make  a  little  concession  off  the  Government  price  in  order  to 
move  them. 

Mr.  C.  E.  Klumb,  sales  manager  of  the  Finkbine  Lumber  Co., 
wrote  Mr.  H.  I.  Isbell,  of  Elkhart,  Ind.,  on  December  21,  1918,  as 
follows : 

The  writer  just  got  back  from  a  meeting  of  the  Sales  and  Distribution  Com- 
mittee of  the  Southern  Pine  Association  held  in  St.  Louis  Thursday  and  Fri- 
day. There  were  present  representatives  from  sixteen  of  the  largest  Southern 
Pine  Mills — both  Long  Leaf  and  Short  Leaf.  We  exchanged  information  on 
the  amount  of  stock  on  hand  and  at  the  mills,  and  after  tabulating  it  discovered 
by  actual  inventory  stocks  are  52%  below  normal,  and  production  about  2/3's 
normal.  All  of  the  mills  have  from  45  to  120  days  timber  cutting  on  their 
books  and  each  mill  is  short  of  stock  with  the  exception  of  #3  and  #4  com- 
mon, which  seems  to  be  normal,  or  above  with  most  concerns.  The  consensus 
of  opinion  on  prices  is  that  conditions  justify  an  advance  of  at  least  $2.00 
on  dimensions.  $1.00  to  $2.00  on  Boards,  considering  each  mills  condition  on 
that  item  and  an  average  of  $1.00  on  the  left  hand  side  of  the  lists.  New 
price  lists  will  be  out  the  first  of  next  week  carrying  these  advances. 

It  developed  that  the  wholesalers  had  no  stock  of  lumber  bought  as  they 
usually  do  at  this  time  of  year.  Dry  stock  seems  to  be  hard  to  get  at  any  price. 
The  meeting  included  some  mills  not  members  of  the  Association. 

We  will  get  out  a  price  list  Monday  along  the  lines  of  the  above  with  adjust- 
ment in  accordance  with  our  own  stock  and  ideas.  I  am  in  somewhat  of  a 
hurry  this  afternoon  and  will  write  you  further  next  week. 

The  sales  manager  of  S.  H.  Chatten  Lumber  Co.,  of  Kansas  City, 
wrote  one  of  its  affiliated  concerns,  the  Union  Lumber  Co.,  Union 
Mills,  Wash.,  on  December  27,  1918,  in  part  as  follows: 

Further  in  reference  to  the  yellow  pine  conditions,  wish  to  advise  that  a 
meeting  of  the  Yellow  Pine  Sales-Managers,  held  in  St.  Louis  a  few  days  ago, 
at  which  all  the  large  mills  in  the  South  were  represented,  it  developed  that 
the  stocks  at  the  mills  run  all  the  way  from  40  to  80%,  and  the  feeling  in. 
that  50%  is  a  fair  basis  of  stocks  on  hand  at  the  present  time. 

There  is  no  dimension  at  all.  Everyone  is  keeping  away  from  this  stock  as 
much  as  possible,  and  limiting  themselves  on  dimension  to  not  in  excess  of  25% 
of  the  stock  in  the  car.  Prices  on  dimension  are  now  from  $2.00  to  $4.00  over 
the  old  government  prices,  which  expired  on  the  23d.  16-ft.  dimension  and 
some  items  of  other  lengths  are  $4.00  over,  and  all  of  it  is  from  two  up  to  four. 

On  December  24, 1918,  Mr.  Austin,  chairman  of  this  meeting,  wrote 
Mr.  E.  J.  Hurst,  secretary  in  charge  of  this  meeting  in  part  as  fol- 
lows: 

This  will  acknowledge  receipt  of  your  letter  of  the  21st  instant,  enclosing 
memo,  of  condition  of  stocks  at  mills  who  were  represented  at  our  recent  meet- 
ing. I  would  like  very  much  to  send  a  copy  of  this  report  to  all  those  attending, 
but  do  not  think  it  would  be  advisable  to  do  so  without  first  referring  the  matter 
to  Mr.  Rhodes.  I  will  take  the  matter  up  with  him  today  and  if  agreeable  will 
later  send  the  list  to  those  present  at  this  meeting. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  25 

On  the  same  day  Mr.  Austin,  wrote  Secretary  Rhodes,  in  part  as 
follows : 

After  adjourning  of  the  recent  meeting  of  the  Committee  on  Sales  and  Dis- 
tribution held  in  St.  Louis  December  19th,  we  discussed  informally  condition 
of  stocks  on  hand  at  the  mills  represented  with  the  result  which  you  will  find 
on  the  sheet  attached.  I  have  refrained  from  including  this  information  with 
the  report  of  this  Committee  which  will  be  sent  out  to  all  those  attending  and 
would  like  to  have  you  advise  if  it  would  be  agreeable  to  distribute  this  infor- 
mation to  all  those  who  attended  the  meeting. 

In  replying  please  be  kind  enuf  to  return  the  attached  list  and  oblige. 

Secretary  Rhodes  replied  under  date  of  January  2, 1919,  in  part  as 
follows : 

Replying  to  yours  of  the  24th  with  list  showing  the  conditions  of  the  Stocks 
reported  by  the  various  mills  which  I  return. 

I  see  no  objections  to  sending  this  list  to  those  who  were  present  at  the  meet- 
ing of  the  Committee  on  Sales  &  Distribution.  The  information  is  a  simple 
statement  of  the  facts  as  they  exist,  and  we  have  a  perfect  right  to  disseminate 
information  of  this  sort. 

The  official  minutes  of  this  meeting  did  not  contain  any  reference 
to  the  discussion  of  prices.  Nevertheless  a  mimeographed  transcript 
describing  a  meeting  of  the  committee  on  sales  and  distribution  on 
December  19,  1918,  was  found  in  the  files  of  some  prominent  manu- 
facturers. One  of  the  Commission's  examiners  describes  this  tran- 
script as  follows : 

These  minutes  were  printed  on  some  duplicating  machine  and  even  the  name 
E.  J.  Hurst,  Sec.  was  printed  in  that  manner,  it  was  in  four  loose  sheets,  at- 
tached, by  wire  paper  clip  same  kind  that  holds  this  letter  together ;  under  this 
clip  on  top  of  the  minutes  was  a  four  small  paged  price  list.  This  price  list, 
evidently  was  printed  on  the  same  duplicating  machine,  which  printed  the 
minutes,  because  the  color  of  the  ink  and  the  type  is  very  similar.  The  price 
list  has  two  punch  holes  in  it,  but  in  the  center  of  the  paper  it  is  fastened 
together  with  a  permanent,  tight  fixed  clip.  Ail  four  pages  of  price  list  are 
folded  in  the  same  place  and  manner  tending  to  show  that  after  being  clipped 
together  they  were  placed  in  envelope  and  mailed. 

The  actual  market  for  yellow-pine  lumber  immediately  after  the 
expiration  of  the  Government  price  fixing  period  was  described  in  the 
Lumber  Trade  Journal,  of  New  Orleans,  in  its  issue  of  January  15, 
1919.  The  editor  of  this  paper  wrote  a  large  number  of  manufac- 
turers on  January  6,  1919,  substantially  as  follows: 

There  seems  to  be  considerable  ignorance  among  the  smaller  sawmill  men 
as  to  what  prices  are  prevailing  in  yellow  pine.  We  can  see  no  reason  why 
prices  should  not  be  higher  than  the  Government  list  that  expired  on  Dec.  23. 

Will  you  please  send  us  your  list  and  stock  sheet  to  aid  us  in  getting  up  an 
article  for  our  January  15th  issue. 

The  results  were  printed  in  the  issue  of  January  16  under  the 
caption  "Smaller  Manufacturers  of  Yellow  Pine  are  Requested  to 


26  LUMBER   MANUFACTURERS7  TRADE  ASSOCIATIONS. 

Note  the  Fact  that  Prices  Secured  are  Higher  than  Government 
Basis."    The  article  then  proceeded: 

Letters  from  more  than  100  yellow  pine  manufacturers  in  the  South  not  only 
indicate  that  stocks  of  lumber  on  hand  at  the  mills  are  badly  depleted  but 
that  the  assortment  is  the  worst  in  years  and  that  production  is  always  below 
normal  and  will  remain  so  for  the  remainder  of  the  winter  and  possibly  during 
the  entire  year.  In  addition  these  reports  indicate  that  prices  are  averaging 
well  above  the  maximum  government  price  lists,  which  expired  Dec.  23d,  with 
but  a  few  items  either  remaining  on  the  old  basis  or  a  little  below. 

The  answers  coming  to  letters  sent  out  arrived  a  little  late  to  permit  of 
proper  analyzation  in  this  issue  but  they  are  sufficient  unto  the  purpose  to 
prove  beyond  the  shadow  of  a  doubt  that  the  government  price  basis  was  not 
only  too  low  to  permit  of  a  profit  to  the  mills  during  the  last  three  months  they 
were  in  effect  but  too  low  for  any  manufacturer  to  make  a  profit  since  the  gov- 
ernment retired  from  the  field  of  price  making. 

The  one  great  feature  that  permeates  the  answers  is  that  prices  since  the 
government  retired  from  price  making,  have  advanced  from  one  to  five  dollars 
above  the  government  basis.  A  few  manufacturers  claim  to  be  securing  the 
$5.00  advance,  which  is  principally  on  timbers.  The  demand  is  shown  to  be 
away  above  the  average  for  this  period  of  the  year,  this  being  normally  the  dull 
season.  Labor  conditions  are  generally  bad  as  to  its  scarcity,  while  logging 
operations  are  in  worse  condition  than  in  years. 

A  resume  of  statements  and  conditions  by  states  will  afford  an  excellent  idea 
of  conditions  as  they  really  exist  and  give  the  small  manufacturers  a  working 
idea  as  to  the  necessity  of  his  asking  and  demanding  a  price  in  excess  of  that 
of  the  maximum  government  price  basis  as  it  is  generally  referred  to: 

It  should  be  recalled  that  during  the  early  part  of  the  year  1919  the 
Industrial  Board,  which  was  organized  under  the  supervision  of  the 
Secretary  of  Commerce,  proposed  that  there  should  be  a  reduction 
and  stabilization  in  the  prices  of  building  material,  including  lumber. 
The  southern  pine  manufacturers  considered  this  question  and 
adopted  a  resolution  at  a  mass  meeting  held  in  New  Orleans  on  April 
2,  1919,  as  follows : 

It  is  contrary  to  the  best  interest  of  the  public  and  of  the  industry  from  both 
a  legal  and  economic  point  of  view,  to  enter  into  any  agreement,  and  the  Secre- 
tary of  the  meeting  be  instructed  to  wire  their  decision  to  the  Industrial  Board  of 
the  Department  of  Commerce,  and  Mr.  John  H.  Kirby,  is  requested  to  confirm  it 
by  letter. 

Further  light  upon  the  discussion  upon  the  adoption  of  this  reso- 
lution is  shown  in  letter  from  Mr.  Chas.  S.  Keith  in  which  he  wrote 
in  part : 

Your  protest  against  price  agreement,  received  by  Mr.  Rhodes  at  New  Orleans, 
was  a  full  and  complete  confirmation  of  the  position  which  I  also  took,  to- wit : 
I  gave  notice  that  if  any  group  of  lumbermen  agreed  with  the  government  to  put 
into  effect  a  basis  of  prices  less  than  that  which  my  company  had  been  receiving, 
and  by  reason  of  artificial  competitive  condition  thus  created  my  company  was 
forced  to  accept  a  lower  basis  of  prices  than  it  otherwise  would  have  obtained, 
we  reserved  the  right  to  proceed  under  the  provisions  of  the  Sherman  Law  to 
recover  triple  damages  for  the  loss  sustained.  My  purpose  in  doing  this  I  sup- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  27 

pose  was  similar  to  your  own  purpose  in  making  your  protest.  I  was  quite  con- 
fident of  the  action  which  the  Southern  Pine  mass  meeting  would  take  on  the 
question,  but  was  more  or  less  afraid  of  what  some  group  of  men  might  feel  it 
politic  to  do  in  the  matter  of  agreeing  with  the  administration,  which  would  be 
productive  of  a  condition  injurious  to  the  industry. 

Bearing  on  this  feature  of  the  situation,  I  am  reminded  of  an  incident  which 
transpired  after  my  return  home.  A  friend  here  in  Kansas  City,  whom  I 
see  most  every  day  and  who  sits  in  with  us  at  our  daily  round  table,  overheard 
a  discussion  of  conditions  between  lumber  manufacturers  and  other  business 
men.  This  friend  had  heretofore  been  converted  by  our  arguments  as  to  prob- 
able market  conditions  and  had  taken  advantage  by  laying  in  considerable 
stocks  of  lumber  before  the  expiration  of  government  fixed  price.  He  stated 
that  if  the  suggestion  of  the  Industrial  Board  as  to  reduction  of  lumber  prices 
had  been  put  in  effect  it  would  have  cost  his  company  $40,000.  I  asked  him 
what  his  attitude  would  have  been  had  we  agreed  with  the  government  reduc- 
tion, and  he  replied  that  he  would  have  felt  strongly  inclined  to  proceed  against 
those  who  entered  into  the  agreement  to  recover  the  amount  of  the  damage 
sustained. 

Therefore,  it  would  appear  that  our  action  in  New  Orleans  on  April  2d  was 
wisely  taken. 

Prices  and  margins  of  profit. 

The  following  data  would  indicate  that  the  current  market  price 
for  lumber  has  almost  continuously  shown  a  reasonable  margin  of 
profit  to  the  manufacturer.  It  should  be  noted  that  as  a  part  of  the 
cost  of  production  the  manufacturer  includes  a  charge  for  stumpage, 
which  usually  gives  to  himself  as  the  owner  of  the  timber  a  substan- 
tial margin  of  profit.  With  references  to  the  reasonableness  of 
prices  in  1915,  Mr.  K.  E.  Jewett,  of  the  Finkbine  Lumber  Co.,  wrote 
Mr.  W.  M.  Beebe,  of  the  Long-Bell  Lumber  Co.,  on  November  5, 
1915,  in  part  as  follows: 

From  our  experience  in  Mississippi  I  cannot  quite  agree  with  you  that  the 
present  price  does  not  pay  a  reasonable  rate  of  interest  to  stumpage  holders, 
and  if  we  could  maintain  the  present  price  we  would  be  abundantly  satisfied 
with  our  operations  in  the  South.  *  *  * 

If  your  suppostion  is  correct  that  you  will  be  able  to  maintain  an  $18  mill 
average  for  at  least  the  first  half  of  next  year,  I  do  not  believe  that  stumpage 
holders  could  feel  that  their  investment  is  not  satisfactory. 

A  year  later,  viz,  December  19,  1910,  Mr.  Edward  Hines  wrote 
Mr.  M.  B.  Nelson,  sales  manager  of  the  Long-Bell  Lumber  Co.,  upon 
the  same  general  subject  in  part; 

I  have  just  heard  of  a  recent  sale  of  the  Weyerhaeuser  companies  of  a  large 
tract  of  timber  in  Louisiana,  and  considering  the  price  they  received  for  it, 
Yellow  Pine  should  bring  today  at  all  mills  not  less  than  $20  average,  to  give 
the  parties  who  bought  this  timber,  any  material  profit  in  the  handling  of  the 
timber  they  bought.  To  my  mind  it  means  $7  stumpage,  and  adding  to  it  the 
cost  of  logging,  manufacturing  and  selling  they  cannot  materially  make  any 
money  at  less  than  a  $20  average. 

Comment  upon  the  margin  of  profit  to  the  southern  pine  manufac- 
turers during  the  war  period  was  made  by  Mr.  R.  H.  Downman,  a 


28  LUMBER   MANUFACTURERS  '   TRADE  ASSOCIATIONS. 

member  of  the  Price  Fixing  Committee  of  the  War  Industries  Board, 
and  himself  the  most  prominent  c}^press  lumber  manufacturer  in 
the  country,  in  a  letter  dated  December  4,  1918.  In  this  he  com- 
mented upon  the  address  of  Mr.  Chas.  S.  Keith  at  the  Chicago  meet- 
ing on  November  22,  1918,  in  part  as  follows : 

By  the  way,  I  notice  in  Keith's  talk  before  the  meeting  in  Chicago  that 
he  now  calls  stumpage  values  "  Capital  Conversion."  If  he  can  keep  up  his 
"  Capital  Conversion  "  on  the  basis  of  $9.00  plus,  from  now  on  he  will  cer- 
tainly create  a  tremendous  prosperity  in  the  yellow  pine  industry  and  one 
that  I  do  not  believe  the  public  will  stand  for  very  long,  and  it  unquestionably 
cannot  be  brought  about  unless,  and  until,  the  government  passes  such  laws 
as  will  enable  them  to  create  a  trust  in  the  yellow  pine  business.  This,  of 
course,  I  do  not  believe  Congress  will  ever  stand  for.  Of  course,  I  regret 
my  belief  that  through  the  action  and  attitude  of  the  yellow  pine  crowd  dur- 
ing the  war  period  in  Washington  it  has  gotten  them  into  such  a  position 
that  it  will  not  get  any  favorable  recognition  in  Washington,  not  even  if  they 
were  to  keep  all  the  Boyles  and  Hagermans  in  the  industry  there.  The 
grea,t  regret  to  me  is  that  their  activities  are  going  to  reflect  on  the  balance 
of  the  lumber  industry  in  this  country. 

Many  of  the  leading  yellow-pine  manufacturers  continually  urged 
that  the  prices  for  lumber  as  fixed  by  the  War  Industries  Board  and 
the  current  market  prices  during  the  early  part  of  the  year  1919 
did  not  show  a  reasonable  profit  over  cost  of  production.  Mr.  C.  V. 
Edgar,  who  was  a  prominent  yellow-pine  manufacturer  and  a  mem- 
ber of  the  Price  Fixing  Committee  of  the  War  Industries  Board, 
took  a  different  position  in  his  letter  to  Mr.  R.  H.  Dowman.  Mr. 
Edgar  wrote  in  part  on  April  9, 1919 : 

When  I  tell  you  that  the  Wisconsin  &  Arkansas  Lumber  Company  has  to 
pay  a  tax  to  the  Federal  Government  this  year  of  $259,000  amounting  to  52.7% 
of  their  total  earnings,  you  no  doubt  will  realize  how  ridiculous  some  portions 
of  Mr.  Kirby's  statement  to  the  Industrial  Board  seem  from  my  view  point. 

With  reference  to  prices  obtained  for  lumber  during  the  summer 
of  1919,  Mr.  L.  S.  Case,  manager  of  the  Weyerhaueser  Sales  Co.,  of 
St.  Paul,  wrote  on  September  2,  1919,  in  part : 

We  have  had  a  most  astonishing  development  recently  in  Yellow  pine.  I 
was  really  reluctant  to  believe  that  Long-Bell,  Keith,  Buchanan,  etc.,  were  ac- 
tually getting  the  tremendous  prices  they  said  they  were  for  Yellow  Pine. 
Recently  the  Southern  Lumber  Co.  came  into  the  market  with  a  small  amount 
of  stock  and  the  latter  part  of  last  week  our  salesmen  sold  a  tremendous 
quantity  of  their  lumber  and  it  looks  as  though  the  Southern  Lumber  Co. 
would  have  to  go  out  of  the  market  again  very  soon.  The  orders  came  from 
all  sections  of  the  country,  from  Nebraska  to  New  York.  We  actually  sold 
B  &  Better  Yellow  Pine  Flooring  in  Nebraska  last  Saturday  at  $93.00.  The 
corresponding  grade  in  V.  G.  Fir  we  were  offering  at  $65.00.  I  cannot  un- 
derstand it  at  all,  but  have  about  decided  either  I  am  crazy  or  else  the  rest 
of  the  world  is  crazy. 

The  following  table  shows  the  average  realization,  average  costs, 
and  average  margin  per  thousand  feet  of  the  Kansas  City  group  of 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 


29 


southern  pine  manufacturers  for  the  years  1915  to  1919,  inclusive, 
and  average  price  and  margin  for  May,  1920,  as  compared  with 
average  costs  for  the  first  three  months  of  1920.  The  realization 
figures  for  1915  ta  1919,  inclusive,  were  compiled  by  A.  A.  Davis, 
statistician  of  the  Kansas  City  Exchange,  a  bureau  affiliated  with  the 
Southern  Pine  Association.  The  cost  figures  used  are  those  compiled 
by  Mr.  Charles  S.  Keith,  chairman  of  the  association  committee  on 
accounting  and  statistics,  from  28  representative  concerns  operating 
60  mills.  The  table  and  other  explanatory  footnotes  follow : 


1915 

1916 

1917 

1918 

1919 

May,  1920 

Realization 

$13.40 

$16.28 

$23.00 

$28.10 

$35.06 

1J55.00 

Costs    

14.49 

14.39 

16.58 

22.69 

»26.12 

•28.65 

Margin 

—  1.09 

1.96 

6.42 

6.41 

8.94 

26.35 

1  Average  realization  for  spring  of  1920  according  to  statement  of  Chas.  S.  Keith,  May  5, 1920. 
1  Southern  Pine  Association  cost  figures  average  for  1919,  including  stumpage  average,  $5.24  (November 
missing). 
•  Average  costs  for  January,  February,  and  March,  1920,  from  Southern  Pine  Association  official  reports 

At  various  times  during  the  past  year  or  more  the  lumber  manu- 
facturers have  given  more  or  less  attention  to  the  question  of  stabiliz- 
ing the  price  of  lumber.  The  mental  attitude  of  some  lumber  manu- 
facturers in  stabilizing  prices  for  lumber  is  probably  fairly  well 
illustrated  by  the  following  telegram  sent  by  Mr.  Edward  Hines  from 
Washington,  D.  C.,  on  February  28,  1920,  to  Mr.  E.  G.  Griggs,  of 
Tacoma,  Wash.  This  telegram  was  as  follows : 

[Western  Union  Telegram.] 

WASHINGTON,  D.  C.,  10:16  AM 

February  28,  1920. 
E.  G.  GBTGGS, 

St  Paul  d  Tacoma  Lumber  Co.,  Tacoma,  Wash. 

Very  confidentially  my  associate  now  California  wired  for  my  opinion  about 
possibility  of  taking  action  as  evidenced  by  your  inquiry.  I  wired  as  follows : 

"  General  lumber  prices  today  no  higher  and  many  cases  not  so  high  as  all 
commodities  that  come  In  competition  with  lumber  or  where  used.  Farming 
community  receiving  higher  prices  for  their  products  relatively  than  lumber 
selling  for  and  never  more  able  financially  to  buy  lumber.  Same  condition  all 
manufacturing  lines  using  lumber  for  increased  facilities  or  where  lumber  is 
integral  part  of  manufacture.  Rents  in  all  large  cities  have  advanced  forty  to 
seventy  five  percent  hence  are  able  to  buy  at  present  prices  for  building.  On 
basis  present  prices  trade  satisfied  to  buy.  Think  would  be  serious  mistake  to 
offer  reduce  prices  but  am  of  opinion  it  would  show  broad  gauged  policy  to  stop 
further  advance  but  not  lower  prices.  Trade  unprecedented  for  actual  con- 
sumption. Believe  good  policy  try  stop  selling  wholesalers  who  are  merely 
speculating  in  lumber  which  gives  wrong  impression  manufacturers  attitude. 
Have  every  confidence  all  lumber  produced  this  year  will  be  wanted  at  present 
prices.  Reasonable  people  satisfied  to  pay  present  prices.  My  advice  stabilize 
present  prices  but  not  reduce.  Western  prices  are  more  than  yellow  pine  north- 
ern pine  or  hemlock.  Lowering  prices  now  would  be  misleading  to  public  as  re- 


30  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

gards  actual  conditions  giving  wrong  impression  but  stabilizing  in  public  state- 
ment would  be  beneficial  to  industry  and  satisfy  public  opinion  that  prices 
reasonable  and  not  influence  stop  buying.  It  would  give  erroneous  idea  to 
reduce  prices  when  impossible  to  ship  sufficient  to  satisfy  present  demand  at 
present  prices.  This  is  the  course  individually  we  are  going  to  pursue.  Know- 
ing eastern  buying  and  consuming  situation  and  meeting  as  many  buyers  as 
I  have  lately  think  it  equitable  course  to  pursue. 

WEST  COAST  LUMBERMEN'S  ASSOCIATION. 

Membership. 

This  association  is  composed  of  approximately  200  manufacturers 
of  Douglas  fir  lumber  in  western  Washington  and  Oregon.  The 
membership  of  this  association  represents  approximately  90  per  cent 
of  the  entire  production  of  Douglas  fir  lumber.  This  kind  of  lumber 
formed  about  one-fourth  of  the  total  production  of  softwood  lumber 
for  the  year  1918.  Part  1  of  the  Bureau  of  Corporations'  Report, 
published  in  1913,  shows  that  in  the  State  of  Washington,  west  of  the 
Cascade  Mountains,  2  holders  controlled  nearly  35  per  cent  of  the 
total  standing  timber;  5  holders  controlled  nearly  45  per  cent;  12 
holders  controlled  51  per  cent,  and  31  holders  controlled  about  60 
per  cent  of  the  total.  In  Oregon,  2  holders  controlled  about  23  per 
cent,  while  7  holders  controlled  more  than  37  per  cent;  13  holders 
about  45  per  cent,  and  21  holders  controlled  51  per  cent  of  the  total 
standing  timber. 

Price  activities. 

Part  IV  of  the  Report  of  the  Bureau  of  Corporations  contained 
the  early  history  of  this  association  and  disclosed  its  price  ac- 
tivities at  that  time.  The  same  activities  were  continued,  with 
slight  modifications,  down  to  the  time  of  the  present  survey.  The 
association,  through  its  officers  and  committees,  prepared  basic  price 
lists  showing  the  relative  value  of  the  different  grades  and  dimen- 
sions of  lumber.  Such  basic  price  lists  were  published  early  in 
the  year  1915  and  again  about  January  1,  1919.  These  basic  lists 
were  copyrighted  in  the  name  of  the  association. 

The  basic  price  lists  were  not  regarded  as  prices  current,  hence 
it  was  necessary  to  have  some  method  of  providing  uniform  discount 
sheets  applying  to  this  list.  Prior  to  our  entry  into  the  World  War, 
such  discount  sheets  were  prepared  at  regular  association  meetings. 
The  following  portion  of  an  official  circular  distributed  by  Mr.  Thorpe 
Babcock,  secretary  of  the  association,  on  October  19,  1916,  is  cited 
as  illustrative  of  the  general  method  of  vogue  at  this  time.  In 
this  circular  it  was  stated  that: 

At  a  meeting  of  lumber  manufacturers  held  yesterday  in  Tacoma,  a  survey 
of  conditions  was  taken  and  it  developed  that  the  car  shortage  was  very  gen- 
eral, with  no  districts  being  favored,  and  probably  not  to  exceed  25%  of  the 


LUMBER  MANUFACTURERS '   TRADE  ASSOCIATIONS.  31 

requirements  being  furnished.  All  present  reported  a  very  healthy  demand; 
in  fact  the  chief  trouble  seemed  to  be  to  avoid  accumulating  orders  in  unrea- 
sonable proportion  to  shipments  and  at  the  same  time  satisfy  regular  customers. 
It  was  reported  that  a  strenuous  effort  is  being  made  among  large  yard  buyers 
to  place  orders  for  future  specifications  and  delivery,  but  that  there  was  no 
tendency  on  the  part  of  the  mills  to  accept  this  business,  every  one  anticipating 
sharp  advances.  A  number  of  those  present  reported  that  they  were  quoting 
prices  above  discount  12  in  order  to  keep  from  accumulating  orders,  and  at 
that  were  receiving  business  and  getting  behind  in  shipments.  As  a  result  of 
all  this  information,  it  was  unanimously  the  opinion  that  in  order  to  reflect 
the  strength  of  the  present  market,  discount  13  would  have  to  take  the  place 
of  number  12  and  should  be  at  a  flat  advance  of  one  dollar  on  all  items. 
Accordingly  this  discount  is  being  prepared  for  a  market  guide  and  will  reach 
your  hands  immediately. 

These  basic  lists  and  discount  sheets  were  printed  by  Kane  & 
Harcus,  printers,  of  Everett,  Wash.  The  discount  sheets  did  not 
disclose  that  they  were  prepared  by,  or  under  the  direction  of,  the 
association,  but  merely  contained  the  name  of  the  printers,  the  dis- 
count sheet  number,  the  base  list  to  which  they  applied,  and  the 
date  of  issuance. 

During  the  year  1918,  the  War  Industries  Board  fixed  maximum 
prices  at  which  Douglas  fir  lumber  should  be  sold.  The  order  fixing 
this  maximum  price  expired  by  limitation  on  January  15,  1919.  At 
this  time,  discount  sheet  No.  24,  applying  to  the  1915  basic  list,  was 
in  effect.  A  meeting  of  fir  manufacturers  was  held  at  Tacoma, 
Wash.,  on  January  24,  1919,  at  which  a  new  discount  sheet  was 
ordered  printed.  Mr.  E.  R.  Hogg,  president  of  the  Atlas  Lumber 
Co.,  and  a  prominent  manufacturer,  wired  Crossett  Western  Lumber 
Co.  on  that  day,  as  follows : 

Discount  twenty-five  advances  following  items  one  dollar  slash  grain  flooring 
ceiling  drop  siding  boards  ship  lap  and  two  inch  dimensions  All  other  items 
same  as  twenty-four  New  base  list  will  be  out  about  two  weeks  when  new 
discount  card  will  be  necessary. 

The  new  basic  list  referred  to  and  described  as  "Rail  B  list"  was 
issued  immediately  after  this  meeting.  A  new  discount  sheet,  known 
as  "  Discount  sheet  No.  I  applying  to  Rail  B  list,"  was  issued  as  of 
January  25,  1919.  The  net  prices  shown  by  this  new  discount  sheet 
were  identical  with  the  net  prices  as  shown  by  discount  sheet  No.  25 
applying  to  the  1915  basic  list. 

Discount  sheet  No.  2  was  adopted  at  a  regular  association  meeting 
held  at  Tacoma,  Wash.,  on  April  8,  1919.  On  April  3,  1919,  Mr. 
R.  B.  Allen,  secretary  of  this  association,  wired  the  S.  H.  Chatten 
Lumber  Co.,  of  Kansas  City,  a  prominent  southern  pine  manufac- 
turer, as  follows : 

Meeting  of  industry  Tacoma  April  eighth  What  are  competitive  prices 
based  on  actual  sales  Kansas  City  territory  Is  there  any  change  from  the 


32  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

figures  previously  given     Barometer  today  shows  orders  fifteen  million  feet 
in  excess  of  production  one  twenty-one  mills. 

Mr.  C.  O.  Fields,  of  the  S.  H.  Chatten  Lumber  Co.,  wrote  Secretary 
Allen  on  the  same  day,  giving  the  information  desired.  At  the  same 
time  he  wrote  an  extended  letter,  in  which  he  stated : 

The  only  possible  thing  that  has  held  the  price  of  yellow  pine  lumber  where 
It  is  today  is  the  fact  that  the  manufacturers  of  fir  lumber  do  not  seem  to  realize 
their  material  has  any  value  and  that  the  present  prices  are  not  made  to  meet 
competition  of  other  lumber.  *  *  *  Prices  on  fir  lumber  should  be  at  least 
$3.00  per  M  higher  than  they  are  at  this  time.  You  would  sell  just  as  much 
lumber,  if  not  more,  at  higher  prices  as  you  are  selling  on  the  present  prices. 
*  *  *  We  would  personally  like  to  see  about  95%  of  the  fir  manufacturers 
"  wake  up  "  and  realize  that  they  are  simply  competing  with  themselves.  *  *  * 
All  of  the  low  prices  that  have  been  made  in  Kansas  City  have  been  made  by  the 
fir  fellows  themselves.  *  *  *  The  best  thing  for  the  manufacturers  of  fir 
to  do  is  to  eliminate  entirely  the  commission  men  or  else  give  them  ironclad 
prices  and  put  their  prices  on  the  basis  of  what  the  lumber  is  worth. 

Mr.  E.  R.  Hogg  was  chairman  of  the  April  8th  meeting.  Mr. 
Hogg  wrote  Mr.  Chatten  of  the  S.  H.  Chatten  Lumber  Co.,  on  April 
9, 1919,  a  letter  in  which  he  stated : 

Your  boys  will  no  doubt  write  you,  or  possibly  have  wired  you,  that  we  had 
a  most  profitable  meeting  of  the  industry  at  Tacoma  yesterday,  at  which  time 
we  discussed  many  things  of  great  interest  to  the  lumber  business. 

Of  particular  interest  at  this  meeting  was  an  exhaustive  statement  made  by 
Mr.  Moore,  our  accountant  (the  expert  accountant  employed  by  the  Association 
to  get  up  the  cost  accounting  statistics)  which,  by  the  way,  you  ought  to  join. 
He  showed  us  where  our  costs  were  nearly  $3.00  per  M  more  than  our  average 
selling  price.  Other  talks  were  made  bearing  on  this  subject  and  others  of 
interest,  with  the  result  that  I  came  home  from  that  meeting  and  have  in- 
structed the  printer  to  get  me  out  a  discount  sheet  No.  2  from  Rail  B  list, 
advancing  a  good  many  items. 

The  advances  in  price  made  by  this  discount  sheet  were  as  fol- 
lows: Common  boards  and  two-inch  dimensions,  $1.00;  No.  2  and 
better  drop  siding,  $2.00 ;  6-inch  No.  2  flat-grain  flooring,  $2.00. 

Discount  sheet  No.  3  was  issued  at  a  meeting  held  May  1,  1919. 
Concerning  this  meeting,  Schwager  &  Nettledon,  of  Seattle,  Wash., 
wrote  to  the  John  Schroeder  Lumber  Co.,  of  Milwaukee,  Wis.,  on 
May  3,  1919,  in  part : 

In  view  of  the  demand  for  yard  stocks,  at  an  Association  meeting  held  at 
Tacoma,  Washington,  day  before  yesterday,  prices  on  practically  all  items 
were  advanced.  We  presume  you  are  familiar  with  Rail  B  list  and  discount 
sheets  No.  2.  At  the  Association  meeting  all  vertical  grain  flooring,  stepping, 
5/8  inch  ceiling  and  corn  cribbing  were  advanced  $2.00  per  thousand;  all 
A.  G.  flooring,  one  inch  ceiling,  common  boards  and  small  plank  were  advanced 
$1.00  per  thousand  over  discount  sheet  No.  2.  Timbers  were  advanced  to  a 
$25.00  f.  o.  b.  bill  base  on  12  x  13.  We  are  inclined  to  believe  that  these 
advanced  prices  can  be  maintained  with  the  exception  of  the  prices  on  the 
timbers: 


LUMBER  MANUFACTURERS*   TRADE  ASSOCIATIONS.  33 

Discount  sheet  No.  4  was  issued  as  of  May  13,  1919.  On  May  15, 
Charles  R.  McCormick  &  Co.,  of  Portland,  Oreg.,  wired  the  Edward 
Hines  Lumber  Co.  as  follows: 

Mills  yesterday  decided  to  get  out  discount  sheet  four  this  as  advance  over 
discount  sheet  three  of  three  dollars  per  thousand  on  all  items  with  exception 
stepping  advanced  five  dollars  twelve  inch  boards  four  dollars  small  timbers 
two  dollars  large  timbers  remain  same  lath  one  twenty-five  advance. 

In  confirming  this  wire,  McCormick  &  Co.  added : 

We  really  think  the  mills  are  overdoing  this  price-raising,  and  they  are  apt 
to  have  a  reaction. 

Mr.  E.  R.  Hogg  wrote  Mr.  E.  D.  Kingsley,  of  the  West  Oregon 
Lumber  Co.,  on  May  14,  in  part : 

Since  I  last  saw  you  the  market  looks  to  me  very  much  better  than  it  did  at 
that  time,  and  I  have  discussed  the  matter  with  a  number  of  manufacturers  in 
this  section  of  the  country,  with  the  result  that  we  are  writing  our  salesmen  to 
advance  prices  two  dollars  per  thousand  on  one  inch  and  two  inch  common,  and 
three  dollars  on  twelve  inch  boards  and  three  dollars  on  all  other  items.  I  do 
not  known  how  the  Oregon  people  will  look  upon  this  advance,  but  from  every 
point  of  view  it  looks  to  us  up  here  as  though  it  were  justified. 

Discount  sheet  No.  5  was  issued  under  date  of  May  28,  1919.  A 
meeting  of  the  fir  manufacturers  was  held  on  that  day.  On  the  day 
prior  to  the  meeting,  Charles  R.  McCormick  &  Co.  wrote  the  Edward 
Hines  Lumber  Co.  as  follows : 

We  have  your  favor  of  the  23rd.  We  enclose  some  discount  sheets  No.  4. 
We  will  no  doubt  be  wiring  you  tomorrow  of  further  advances  the  mills  con- 
template, although  in  talking  with  one  of  the  mills  at  Everett  today  they  were 
in  hopes  that  they  would  not  raise  prices  and  if  they  did,  that  they  would  not 
raise  them  beyond  a  dollar.  However,  it  remains  to  be  seen  what  the  radi- 
cals do. 

On  May  29  McCormick  &  Co.  again  wrote : 

Mills  yesterday  made  following  advance  over  discount  sheet  four,  Rail  B  List : 
4  inch  slash  flooring,  $3.00  advance;  6  inch  slash  flooring,  $2.00  advance; 
f"  x  4"  ceiling,  $2.00;  1"  x  4"  ceiling,  $3.00;  1"  x  6"  two  and  better  drop 
siding,  $2.00;  1"  x  6"  three  drop  siding,  $1.00;  Corn  Cribbing,  $2.00;  1  x  8-10 
and  12  inch  boards  and  ship  lap,  $2.00  advance ;  All  items  cedar,  $2.00  advance. 

On  May  31  Mr.  W.  H.  Boner,  of  the  Weyerhaueser  Timber  Co.,  of 
Everett,  Wash.,  issued  a  bulletin  to  their  salesmen  in  which  it  was 
stated : 

The  lumber  market  here  on  the  coast  seems  to  be  pulling  beyond  control  of 
any  one.  Discount  sheet  No.  5  has  been  issued  by  some  of  the  mills,  but  only 
with  the  thought  of  leveling  up  prices  although  there  seems  to  be  some  talk 
of  another  advance,  which,  personally,  we  are  opposed  to,  but  the  aggressive- 
ness of  labor  and  possible  advance  in  logs  may  make  it  necessary. 

On  the  same  day  Mr.  Boner  wrote  the  Weyerhaueser  Sales  Co., 
of  St.  Paul,  in  part: 

We  are  today  sending  you  a  supply  of  discount  5,  which  it  was  decided  by  a 
majority  of  the  manufacturers  on  the  coast,  should  be  put  into  effect  immedi- 


34  LUMBER   MANUFACTURERS  *  TRADE  ASSOCIATIONS. 

ately.  *  *  *  The  advance,  at  the  time  it  was  made,  did  not  appear  to  be 
called  for,  although  the  Committee  on  Values  merely  leveled  up  the  prices  of 
fir  lumber  to  a  competitive  basis  with  yellow  pine,  based  on  the  Kansas  City 
and  Chicago  rate  of  freight. 

Mr.  J.  H.  Bloedell,  of  the  Bloedell-Donovari  Lumber  Mills,  wrote 
Mr.  Charles  S.  Keith,  of  Kansas  City,  a  letter  on  June  5,  1919,  in 
which  he  stated : 

We  recently  issued  Discount  No.  5,  advancing  slash  grain  flooring  $3.00  and 
boards  and  some  other  items  $2.00  per  M  feet.  We  figure  that  this  discount 
will  realize  between  $20  and  $27  per  M  feet  of  the  average  mill  run  product — 
the  best  the  industry  has  been  able  to  do  except  in  the  summer  of  1918,  when 
ship-building  orders  and  airplane  stock  brought  the  average  sales  to  $30.00. 

At  this  meeting  a  committee  on  values  was  appointed,  with  Mr. 
Thorpe  Babcock  as  chairman.  Mr.  Babcock,  in  defining  the  duties 
of  this  committee,  wrote  as  follows: 

The  idea  behind  the  appointment  was  that  this  committee  should  watch 
conditions  carefully,  and  by  study  of  markets,  competition,  supply  and  demand 
of  competitive  goods,  and  other  such  features  influencing  our  own  business, 
would  be  in  a  position  to  advise  the  industry  from  time  to  time  the  conditions 
surrounding  the  marketing  of  our  own  products. 

Chairman  Babcock  called  a  meeting  of  this  committee  at  Tacoma, 
on  June  11.  In  the  meantime,  each  member  of  the  committee  sought 
to  procure  information  for  use  at  this  meeting.  The  extent  of  the 
advance  made  in  prices  at  this  meeting  is  shown  by  letter  of  the 
Portland  Lumber  Co.,  of  Portland,  Oreg.,  to  the  Interstate  Lumber 
Co.  of  Denver,  Colo.,  on  June  12,  in  which  it  was  stated : 

For  your  information,  wish  to  advise  that  Discount  S-heet  No.  6,  showing 
an  advance  of  $3.00  over  No.  6  (5)  on  all  items,  is  being  published  today.  The 
market  is  considerably  stronger  and  we  would  advise  that  you  figure  your 
prices  as  closely  to  No.  6  as  possible. 

On  June  18, 1919,  Mr.  Howard  Jayne,  of  the  Willapa  Lumber  Co., 
and  who  was  a  member  of  this  committee  on  values,  wrote  Chairman 
Babcock  in  part : 

With  reference  to  the  work  of  the  Price  Committee  of  the  Association,  I 
am  afraid  my  ideas  are  not  in  accord  with  the  committee,  in  that  I  personally 
feel  quite  opposed  to  coming  out  with  so  many  discount  sheets,  with  such 
radical  advances. 

It  seems  to  me  the  market  is  in  a  shape  where  it  is  profitable  to  all  parties 
concerned  on  a  basis  of  discount  sheet  No.  5,  and  that  from  that  point  on  it 
should  be  a  case  of  the  mills  asking  a  price  commensurate  with  their  stock 
on  hand  and  their  ability  to  deliver  it.  Perhaps  it  is  true  that  Discount  Sheet 
6  conforms  to  present  market  conditions,  in  fact,  we  have  sold  items  on  that 
basis;  nevertheless,  we  believe  concerted  action  on  the  part  of  the  mills 
should  be  dropped  from  now  on. 

Chairman  Babcock  replied  in  part  as  follows : 

The  funny  part  of  this  is  that  I  fully  agree  with  you,  and  so  does  every 
one  else;  but  if  you  had  attended  committee  meeting,  you  would,  I  think, 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  35 

have  concurred  in  the  opinion  that  6  was  the  only  answer  to  this  most 
peculiar  situation.  I  expect  to  be  in  Portland  next  Friday  for  Association 
Trustees  meeting,  and  would  like  to  discuss  this  with  you.  It  is  too  big 
to  handle  in  a  letter.  Logs  and  labor  are  chasing  the  discount  sheets  here 
There  is  still  doubt  as  to  which  will  get  there  first. 

No  other  uniform  discount  sheets  were  officially  issued  during  the 
year  1919.  The  committee  on  values,  however,  was  very  active  dur- 
ing the  remainder  of  the  year.  During  the  month  of  October,  1919, 
various  meetings  were  held  and  information  exchanged  by  corre- 
spondence. Discount  sheet  No.  6-a  was  prepared  by  Kane  &  Harcus, 
printers,  as  of  October  29,  1919 ;  but  same  does  not  appear  to  have 
been  distributed.  The  following  telegram  from  Secretary  Allen, 
from  Washington,  D.  C.,  dated  October  13, 1919,  to  his  assistant,  Mr. 
Brown,  in  charge  of  the  association  office,  may  be  responsible  there- 
for: 

Brown  wire  eleventh  mentions  sales  managers  conference  stop  while  the  asso- 
ciation has  no  participation  in  such  conferences  it  is  urgently  advisable  that 
mills  do  not  issue  concession  sheets  as  result  of  any  meeting  or  conference 
legality  of  association  basic  list  doubtful  stop  dealers  strong  for  law  of  supply 
and  demand  when  it  works  their  way  are  questioning  alleged  uniformity  of 
concession  sheets. 

The  new  basic  list  and  a  discount  sheet  applying  thereto  were  pub- 
lished and  distributed  about  March  1,  192CT.  The  basic  list  was  com- 
piled by  the  same  association  price  list  committee  which  compiled  the 
previous  basic  list,  although  the  association  officers  stoutly  disclaim 
any  responsibility  for  the  issuance  thereof.  The  printers  had  pre- 
viously compiled  a  list  of  manufacturers  and  lumber  dealers  who 
had  standing  orders  upon  their  books,  for  delivery  of  discount  sheets 
as  soon  as  same  were  authorized  by  the  proper  parties.  About  March 
1,  1920,  Kane  &  Harcus  obtained  current  price  lists  of  a  number  of 
fir  manufacturers.  A  compilation  from  these  was  used  as  the  basis 
for  discount  sheet  No.  1,  applying  to  the  new  basic  list.  This  new 
basic  list  and  discount  sheet  applying  thereto  were  sent  to  each  sub- 
scriber appearing  on  the  books  of  the  printers,  at  that  time. 

The  prices  obtained  for  fir  lumber  in  1919-20  rose  to  the  same 
relatively  abnormal  height  as  that  obtained  for  other  lumber.  The 
profits  derived  therefrom  were  of  necessity  very  large.  The  net 
prices  as  shown  by  the  discount  sheets  were  $35  to  $40  or  more  per 
thousand  above  Rail  B  basic  list  of  1919,  which  was  merely  intended 
as  a  basic  list  from  which  substantial  discounts  were  supposed  to 
be  allowed. 

Miscellaneous  activities. 

This  association  has  established  and  maintained  uniform  grading 
rules,  uniform  standard  weights  and  methods  in  figuring  freight 
charges,  uniform  terms  of  sale  and  a  uniform  cost  accounting  system. 


36  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

It  has  published  barometers  showing  the  amount  and  relation  of 
lumber  cut,  ordered  and  shipped,  and  also  furnished  various  other 
kinds  of  information  which  would  influence  the  market.  Sales  re- 
ports were  also  issued,  whereby  the  manufacturers  were  enabled  to 
compare  the  actual  prices  obtained  with  the  prices  quoted  in  the 
uniform  discount  sheets.  If  any  manufacturer  interfered  with  the 
market  price  of  lumber  by  quoting  a  lower  price,  he  was  immediately 
notified  by  some  manufacturer  of  the  discount  sheet  in  effect  and 
given  other  general  information  which  would  encourage  him  to  ob- 
tain full  list  prices. 

. 
WESTERN   PINE    MANUFACTURERS'   ASSOCIATION. 

This  association  is  composed  of  about  50  concerns,  located  in  the 
so-called  "  Inland  empire,"  comprising  the  eastern  part  of  the  States 
of  Oregon  and  Washington,  western  Montana,  and  the  State  of 
Idaho.  The  membership  of  this  association  controls  about  80  per 
cent  of  the  total  output  of  lumber  in  this  region.  In  Idaho,  three 
holders  are  said  to  control  about  46  per  cent  of  the  total  standing 
timber,  while  six  holders  control  58  per  cent  of  the  total  standing 
timber.  In  eastern  Washington,  two  holders  are  said  to  control  ap- 
proximately 36  per  cent,  *vhile  in  eastern  Oregon,  two  holders  are 
said  to  control  27  per  cent  of  the  total  standing  timber. 

Price  activities. 

This  association  has  openly  prepared  and  published  basic  price 
lists  from  time  to  time.  Such  lists  have  been  issued  as  follows: 

January  15,  1914 ;  February  1,  1915;  February  1,  1916;  January  1,  1917; 
February  15,  198;  July  15,  1918;  July  15,  1919;  June  1,  1920. 

These  lists  were  prepared  and  distributed  by  the  association.  On 
the  cover  page  the  following  recital  is  typical : 

Current  price  list  of  western  soft  pine,  etc.  Compiled  and  Issued  by  the 
Western  Pine  Manufacturers  Association,  Spokane,  Washington.  Copyrighted, 
1917,  Western  Pine  Manufacturers  Association,  Spokane,  Washington. 

Discount  sheets  applying  to  the  various  base  lists  were  issued  from 
time  to  time  after  a  meeting  of  the  manufacturers  under  the  auspices 
of  the  association.  Often  such  concession  sheets  were  distributed 
through  the  association  office,  while  at  other  times,  those  desiring 
concession  sheets  were  referred  to  the  printer.  The  following  cir- 
cular issued  July  23,  1919,  by  Mr.  A.  W.  Cooper,  secretary  of  this 
association,  is  typical : 

The  new  price  list,  dated  July  15,  1919,  is  now  out  and  ready  for  distribution. 
Doubtless  most  of  you  have  received  your  copies  from  the  printer. 

In  the  matter  of  concession  cards,  we  understand  that  substantial  advances 
have  been  made  by  certain  mills,  and  that  the  Spirit  Lake  Publishing  Company 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  37 

has  reflected  the  advances  in  its  discount  on  the  old  list,  known  as  Discount 
No.  8. 

Discount  No.  1,  on  the  new  list,  has  been  issued  by  the  printer  on  the  same 
basis  as  old  Discount  7.  There  will  be  a  Discount  2  on  the  new  list,  correspond- 
ing with  Discount  9  on  the  old  list. 

In  ordering  your  discounts  from  the  printer  you  should  advise  him  whether 
you  want  1  or  2,  as  there  is  a  great  distinction,  and  it  will  depend  upon  whether 
you  are  selling  upon  the  basis  of  7  or  the  new  card  8.  Remember,  card  1  on  the 
new  list  corresponds  as  to  7  on  the  old,  and  card  2  corresponds  to  8  on  the  old 
list.  Please  be  governed  accordingly  and  advise  the  printer  which  you  want. 

On  the  same  day,  Secretary  Cooper  wired  the  Spirit  Lake  Publish- 
ing Co.,  authorizing  the  publication  of  these  discount  sheets,  as 
follows : 

Issue  discount  one  as  per  your  letter  also  discount  two  according  discount 
eight  old  list.  Mills  will  advise  which  they  want. 

A  letter  written  by  Mr.  T.  A.  McCann,  president  of  this  association 
to  Mr.  E.  L.  Carpenter,  of  Minneapolis,  on  June  30,  1919,  with  ref- 
erence to  an  association  meeting  held  at  Spokane,  Wash.,  on  June 

OK     inir\     •      •  f.    n 

25,  1919,  is  in  part  as  follows : 

Our  meeting  at  Spokane  was  so  optimistic  that  I  had  difficulty  in  holding 
from  an  advance  on  Western  Pine.  Fir  and  larch  dimensions  were  advanced 
$3.00,  in  spite  of  the  advance  of  $3.00  only  two  weeks  ago ;  fir  and  larch  boards 
advanced  $1.50.  Discount  card  No.  6  has  been  put  into  effect  by  everybody 
on  Western  Pine,  although  it  was  only  a  week  ago  that  Boise-Payette  put  it 
in,  and  the  Weyerhauser  Agency  had  been  taking  orders  on  card  No.  5  even 
as  late  as  the  day  before  the  meeting.  But  it  is  generally  understood  that  card 
6  is  now  in  effect.  In  spite  of  this  rather  belated  acknowledgment  of  this 
market  situation  the  Weyerhauser  interests  were  very  strong  for  a  further 
advance.  We  did  put  4x4  shop  up  $2.00,  No.  3  shop,  $1.00;  number  2  and 
better  shop,  $2.00.  This  leaves  it  on  identically  the  same  price  as  the  last 
market  sheet  from  California,  so  that  it  was  arranged  for  a  committee  com- 
posed mostly  of  mills  which  have  shop  contracts  to  go  down  and  interview  the 
California  men,  with  an  idea  of  getting  our  shop  prices  somewhat  in  line  with 
our  common  prices,  so  that  the  absurdity  under  which  we  are  now  operating  will 
not  continue. 

The  foregoing  is  cited  merely  as  typical  of  the  price  activities  of 
the  western  pine  manufacturers  at  their  association  meetings.  The 
prices  fixed  by  these  discount  sheets  became  so  high  as  to  cause 
alarm  among  the  lumbermen  themselves.  The  price  movement  of 
western  pine  corresponded  very  closely  with  that  of  southern  pine, 
Douglas  fir,  and  hemlock  lumber. 

On  August  11,  1919,  Mr.  D.  C.  Eccles,  president  of  the  Oregon 
Lumber  Co.,  wrote  in  part: 

To  my  mind,  the  action  of  the  Spokane  members  in  putting  out  discount 
No.  8,  if  not  already,  will  do  more  harm  to  the  industry  than  any  other  move 
that  has  been  made.  There  was  not  anything  that  justified  such  a  radical  step. 

An  interesting  telephone  conversation  between  Mr.  Chisholm,  of 
the  Shevlin-Hixon  Co.,  and  Mr.  Case  of  the  Weyerhaueser  Sales  Co. 


38  LUMBER   MANUFACTURERS  '   TRADE  ASSOCIATIONS. 

was  reported  by  a  Minneapolis  salesman  of  the  St.  Paul  &  Tacoma 
Lumber  Co-.,  of  Tacoma,  Wash.,  who  wrote  his  company  on  August 
1,  1919,  in  part  as  follows: 

Mr.  Chisholm,  of  the  Shevlin  Carpenter  interests,  called  the  Weyerhaueser 
Sales  Office  in  St.  Paul,  on  the  'phone,  and  told  Mr.  Case  that  the  action  of 
the  Weyerhaueser  Sales  Company  would  do  more  to  get  the  lumber  industry 
into  the  courts  and  before  the  Federal  Trade  Commission  than  any  action 
recently  taken  by  mill  men  regarding  prices. 

Mr.  Chisholm,  told  Mr.  Case  the  Weyerhaueser  interests  were  crazy,  and 
that  if  Mr.  Chisholm  were  on  the  jury,  he  would  surely  vote  to  bring  in  a 
verdict  of  guilty. 

Mr.  Chisholm  further  told  Mr.  Case  that  it  would  have  been  better  to  keep 
off  the  market  altogether. 

Actions  of  Weyerhaueser  Sales  Company,  has  created  considerable  criticism 
and  gossip,  and  as  these  people  have  a  good  many  enemies,  there  is  a  possi- 
bility of  some  complaints  being  filed  with  the  Federal  Trade  Commission. 

Other  activities. 

The  manufacturers  within  this  association  produce  a  large  amount 
of  lumber  used  in  the  manufacture  of  boxes.  The  fruit-growing 
and  meat-packing  industries  are  large  consumers  of  this  material. 
A  box.  bureau  was  organized  within  this  association  during  the  year 
1917.  At  different  times  agreements  on  prices  for  box  materials, 
with  a  prorating  of  the  total  business  among  the  members,  have  been 
undertaken  and  carried  out.  The  manufacturers  of  box  lumber  of 
this  region  cooperate  with  the  manufacturers  of  box  lumber  in  Cali- 
fornia and  with  the  spruce  manufacturers  on  the  Pacific  coast  for  the 
purpose  of  eliminating  competition  in  the  sale  of  their  box  lumber. 
This  association  maintains  an  information  bureau  to  which  actual 
sales  are  reported  by  the  members.  These  are  summarized  and  dis- 
tributed to  all  members,  thus  enabling  the  manufacturers  to  judge 
the  reaction  of  the  market  to  the  prices  quoted  in  the  standard  dis- 
count sheets. 

Uniform  grading  rules,  uniform  methods  of  figuring  freight  rates, 
and  uniform  terms  of  sale,  are  also  established  and  maintained  by 
the  members  of  this  association. 

NORTHERN  HEMLOCK  &  HARDWOOD  MANUFACTURERS'  ASSOCIA- 
TION. 

The  data  secured  during  the  course  of  the  investigations  pertain- 
ing to  the  activities  of  hemlock  manufacturers  has  not  been  fully 
analyzed.  The  following,  however,  will  broadly  indicate  the  methods 
used  by  this  association : 

Lumber  manufacturers  of  the  State  of  Wisconsin  and  the  Upper 
Peninsula  of  Michigan  constitute  the  membership  of  this  association. 

For  many  years  current  price  lists  of  hemlock  lumber  were  pub- 
lished by  A.  L.  Broughton,  printer,  of  Minneapolis,  Minn.  These 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  39 

current  price  lists  have  been  used  for  many  years  by  the  Wisconsin 
manufacturers  as  their  actual  price  lists.  The  prices  as  shown  by 
Broughton's  list  are  usually  somewhat  above  the  actual  prices  being 
obtained  by  the  manufacturers  of  hemlock  lumber. 

Bureau  of  statistics  and  educational  information. 

In  December,  1916,  the  members  of  this  association  appointed  a 
committee  of  12  sales  managers  to  maintain  a  "  Bureau  of  statistics 
and  educational  information."  Care  was  taken  to  select  as  mem- 
bers of  this  committee  representatives  from  each  district  of  the  region 
covered  by  this  association.  This  committee  met  approximately 
each  month  and  discussed  prices,  and  at  times  prepared  data  which 
was  forwarded  to  Mr.  Broughton  to  be  used  by  him  in  the  printing 
of  a  new  list. 

The  following  letter  of  date  March  3,  1918,  written  by  Mr.  H.  H. 
Butts,  chairman  of  this  committee  and  sales  manager  of  the  Park 
Falls  Lumber  Co.,  which  company  is  controlled  by  Mr.  Edward 
Hines,  to  Mr.  G.  C.  Robson,  secretary  of  this  committee  and  sales 
manager  of  the  Kinzel  Lumber  Co.,  of  Merrill,  Wis.,  is  illustrative 
of  the  way  in  which  this  matter  was  cared  for : 

I  am  attaching  herewith  copy  of  letter  which  I  wrote  to  Al.  Klass  yesterday 
regarding  changes  which  our  committee  recommended  in  Chicago,  Tuesday,  and 
which  I  believe  covers  the  entire  situation  in  accordance  with  our  deliberations 
with  the  possible  exception,  as  you  will  note  by  checking  up,  that  I  did  not 
include  the  advances  on  the  10/4  and  12/4  Birch,  Rock  Elm  and  Maple  which  we 
thought  best  to  put  on  there  in  order  to  make  the  list  coincide  with  the  recent 
price  given  the  Vehicle  Association. 

This  was  prompted  for  the  reason  that  on  the  day  following  the  Board  of 
Directors  met  with  the  Emergency  Committee  of  our  Association  and  went  on 
record  as  desiring  the  Association  further,  that  this  be  done  by  our  Emergency 
Bureau  just  as  soon  as  we  could  get  together  with  the  Michigan  Emergency 
Bureau  in  a  joint  meeting. 

Therefore,  as  our  main  olTject  in  making  the  advances  was  to  back  up  the 
Emergency  Bureau  probably  you  will  agree  that  it  was  the  proper  thing  to  do. 

Now  I  have  not  as  yet  gotten  round  to  the  report  of  our  committee  meeting 
of  last  Tuesday,  owing  to  the  fact  that  I  am  utterly  swamped  with  correspond- 
ence in  connection  with  our  business  here  and  the  Lord  only  knows  when  I  will 
get  to  it. 

However,  I  thought  the  main  essential  thing  was  to  get  these  changes  to  Klass 
so  he  could  get  busy  with  Broughton  and  have  the  new  list  in  effect  at  least 
by  April  1st. 

Mr.  Al.  Klass  was  one  of  the  members  of  this  committee.  He  re- 
plied to  Mr.  Butts,  under  date  of  March  28,  1918,  in  part  as  follows : 

I  received  your  letter  of  the  22nd  and  after  studying  it  all  out,  got  the  lists 
checked  up  accordingly  and  telephoned  Broughton  to  go  ahead  with  the  re- 
issuing of  them. 

I  was  very  sorry  indeed  that  it  was  impossible  for  me  to  be  present  at  the 
last  meeting,  because  I  realized  it  was  important,  and  really  wanted  to  be  there, 
91321°— 22 4 


40  U'MBKi;     M  AM    I  AiTCKKIts'    TKADK    ASSOCIATIONS. 

lull  another  mailer  of  business  rum*'  up  Jusl  :il  tho  last  minute  which  took  me 
to  Philadelphia  :IIM|  I  di<l  not  rrl  back  homo  until  Saturday  night. 

llronghlon  nssurcd  me  thai  ho  would  keep  right  after  the  now  lists  until  ho 
got  thorn  (Hit  :ind  Imped  to  luivo  both  the  Hemlock  :uid  Hardwood  on  t  ho  way 
Hhortly  nTlor  the  lirst  of  I  ho  month. 

I  believe  i  h:i(   nil  tho  changes  m:ido  ;ire  justified  iind  in  fuel,  rather  fool  that 

some  ilonis  of  No.  I  mid  IMoreh.  :ind  No.  'J  oould  stand  a  little  advance  especially 

nid  2x6,  hut   perhaps  it   Is  Just   as  well  to  lot   the  matter  stand  as  it:  Is  until 

\\e   Iind    out    what    develops   in    (he  spring   trade.      Wo,   ourselves,   however,   havo 

already  made  sales  of  Merch.   llomloek   that   are  higher  than  I  ho  list. 

Tlio  following  correspondence  «.  year  later  is  also  typical. 
On   March  5,   1DID,  Mr.  hroiighton  wrote  Mr.   Al.  Klass,  who  was 
thru  chairman  of  tins  committoo,  in  part,  as  follows: 

Wo  rooHvod  a  letter  a  few  days  ago  from  a  Wisconsin  wholesaler,  in  which  he 
es  us  for  gelt  In:;  out  lh<%  h.-mlo<  k  pocket  price  lists,  and  in  which  ho  says: — 
"There  is  not  n  single  mannfacl  nror  adopting  or  issuing  this  list,  and  I  doubt 
if  the  manufacturers  anllmri/ed  this  issue  of  a  poekot  prioo  list."  Of  course 
i  In  -  is  charging  us  directly  with  making  the  changes  and  gelling  the  lists  nut 
entirely  on  our  own  responsibility.  *  *  * 

The  Co\  eminent  made  a  thorough  investigation  into  matters  a  few  years  jigo 
\\lion  wo  were  put  on  the  rack,  ;md  possibly  they  may  do  this  nirnln.  It  strikes 
tis  that  it  would  be  much  better  for  all  concerned  if  the  manufacturers  would 
send  out  liHt.s  RB  they  used  t<»  and  cannot  understand  why  they  do  not  at  this 
time. 

To  which   Mr.   Klass  replied,  on  M:irch  7,  11) ID,  ;is   follows: 

I  have  your  favor  of  the  r.th  and  note  your  remarks. 

What,  the  party  tolls  you  Is  partly  I  rue  and  partly  untrue.  The  fact  of  tho 
matter  is.  most  ,,f  the  ma  nil  fact  urcrs  throughout  tho  Stale  are  quoting  bills 
within  the  Stale  of  Wisconsin  about  Jfl.(M)  per  M  off  tho  February  lists,  but  on 
the  business  going  Kiist.  of  Indiana  and  Illinois  Stale  line  the  prevailing  quoin 
(ions  are  in  line  with  the  I'Vbruary  list,  SO  it  will  bo  hard  to  determine  any  HHM-O 
closely  \\  hat  the  market  is. 

If  you  wore  to  Issue  a  list  representing  market  conditions  in  Wisconsin,  it 
\\ould  be  as  above  stated,  about  $1.00  lower  than  the  February  list,  but  this 
\\ould  not  co\cr  market  conditions  farther  oast,  so  it  would  be  boiler  to  have  a 
list  representing  the  highest  market  conditions,  and  then  individuals  can  do  ns 
they  please  about  quoting  prices  or  making  sales.  The  point  is  just  this,  the 
r.ureaii  of  Statistics  and  lOducat ional  Information  in  connection  with  the  North- 
ern Hemlock  and  Hardwood  Mfgrs.  Association  is  a  committee  appointed  for 
the  purpose  of  reporting  to  members  of  I  ho  Association  a  general  survey  of  mar- 
ket conditions  regularly,  as  well  as  prevailing  statistics  showing  costs  of  pro- 
duction, stocks  on  hand,  etc.,  but.  of  course  they  do  not  advise  any  one  (he  prices 
at  which  they  shall  soil. 

MICHIGAN   HARDWOOD    MANUFACTURERS'   ASSOCIATION. 

The  manufacturers  of  lumhor  in  the  Lower  I'cninsuhv  of  Michigan 
produce  hoth  hemlock  and  hardwood  luinhcr.  This  association  was 
organi/ed  in  1DOO.  One  of  the  purposes  expressed  in  the  call  for 
the  first  meeting  was  "to  achieve  prices  commensurate  with  existing 
stum  page  value  and  manufacturing  costs." 


LUMBER.   MANri'ACTrKF.ns'   TRAPK    ASSOCIATIONS.  41 

Committee  on  market  conditions. 

This  association  has  maintained  a  committee  on  market  conditions, 
which  originally  met  quarterly,  hut  during  the  year  U>li>  met  about 
once  each  month. 

R.  D.  Frederick  £  Sons,  printers,  of  Cadillac,  Mich.,  printed  a 
current  price  list  quite  similar  to  that  printed  hy  Broughton  for 
the  Wisconsin  manufacturers.  The  data  for  these  price  lists  wen- 
supplied  to  the  printer  through  the  otVico  of  the  secretary  of  the 
association.  He,  in  turn,  obtained  it  from  the  committee  on  market 
conditions.  The  official  minutes  of  the  meetings  of  this  association 
show  that  prices  were  adopted  at  the  meetings  of  the  association. 
The  market  conditions  committee  usually  held  their  meeting  imme- 
diately prior  to  the  regular  association  meeting  and  submitted  a 
report  upon  prices.  The  following  excerpt  from  the  minutes  of  the 
association  meeting  held  at  IVtroit,  Mich.,  on  January  -!>,  HMD.  is 
illustrative.  The  chairman  of  the  meeting,  in  calling  for  the  report 
of  the  market  conditions  committee,  stated  in  part  : 

I  miirht  say  yesterday  your  Market  Conditions  Conunltteo  was  in  session  a 
jjood  part  of  the  time,  probably  the  largest  at tendance  we  have  ever  bail,  and 
the  subject  of  prices  was  gone  over  and  given  very  careful  consideration,  and 
the  prices  that  they  were  going  to  reeonunend  to  yon  today  come  from  them 
as  reeoinniendntion  of  u  list  that  lliey  thought  was  al)sohitely  right.  *  *  * 

It  is  a  hard  matter  to  recommend  a  prieo  list  that  will  satisfy  all  eondi 
tions,  because  we  vary  so  in  our  views,  nnd  the  list  that  they  have  made  is 
taken  from  the  very  best  ideas  that  could  be  arranged.  Kaeh  item.  1  might 
say,  has  been  taken  up  separately,  nnd  the  twenty  four  members  present  yes- 
terday expressed  their  views.  Some  of  them  did  not  well,  our  prices  were 
not  unanimous  in  any  way.  while  they  came  out  pretty  nearly  where  we 
expected,  and  the  majority  always  rule  in  a  matter  of  this  kind. 

It  appeal's  from  these  minutes  that  extensive  argument  was  had 
over  the  report  of  this  committee.  During  the  argument  the  chair- 
man stated: 

From  this  recommendation  of  No.  :\  common  it  is  up  to  you  to  either  adopt 
or  carry — if  you  care  to  consider  that  in  any  way,  why  you  can  do  that;  but 
bear  in  mind  at  all  times,  of  course,  that  this  list  is  supposed  to  be  the  bottom 
list,  that  is.  supposed  to  be  the  ground  prices  so  far  as  the  committee  could 
find  out. 

Legal  advice  and  its  application. 

During  the  1919  summer  meeting  of  the  association  this  plan 
of  handling  price  lists  was  submitted  to  Mr.  L.  (\  Boyle,  general 
attorney  of  the  National  Lumber  Manufacturers'  Association,  for 
his  opinion.  Mr.  Boyle  rendered  an  opinion,  as  follows: 

Upon  returning  to  my  Washington  oftiee  I  Mud  my  desk  so  covered  that  I 
have  not.  had  time  to  prepare  the  resolutions  that  I  promised  to  send  you.  I 
will  do  this  iii  due  course. 


42  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

You  will  recall  that  I  suggested  when  I  returned  to  my  office  that  I  would 
write  you  in  reference  to  your  price  list  that  you  publish.  I  am  doing  this 
in  the  enclosed  letter. 

You  will  recall  that  it  was  arranged  that  I  should  present  the  Wisconsin 
Association  plan  to  the  Department,  which  I  will  do,  but  it  will  take  me 
some  little  time  to  prepare  my  brief,  and  as  a  conservative  and  precautionary 
method  I  am  urging  your  group  to  abandon  your  price  list  plan  until  I  have 
had  an  opportunity  to  discuss  the  Wisconsin  situation  with  the  Department  of 
Justice. 

In  the  event  my  suggestion  is  accepted,  then  I  believe  you  should  make 
a  formal  record  of  the  fact  that  you  are  abandoning  the  plan  because,  on 
the  advice  of  counsel,  the  suggestion  has  been  made  that  the  manner  of  the 
publication  of  the  price  list  might  be  construed  as  an  indirect  method  of  price 
control,  that  although  this  is  not  the  purpose  of  the  plan,  that  in  order  to 
remove  the  appearance  of  evil  the  plan  will  be  abandoned,  etc. 

He  supplemented  this  opinion  by  again  writing  on  the  same  day, 
as  follows : 

Apropos  of  our  brief  talk  at  Mackinac  Island  the  other  day,  I  desire  to 
suggest  that  it  is  my  very  fixed  conclusion  that  the  price  list  that  your  group 
is  publishing  is  susceptible  of  misconstruction  and  is,  therefore,  under  present 
conditions,  most  dangerous. 

Since  my  return  to  Washington  I  learn  with  more  or  less  definiteness  that 
it  is  the  purpose  of  the  Department  of  Justice  to  commence  a  most  searching 
investigation  of  the  present  high  price  causes.  You  and  I  know  that  if  there 
was  no  lumber  association  extant  that  lumber  prices  would  nevertheless  be 
mounting  skyward,  and  this  due  to  conditions  over  which  we  have  no  con- 
trol. When  the  armistice  came  there  was  no  lumber  stocks  at  the  mill  nor 
in  the  dealers'  yard.  Labor  conditions  are  bad,  lack  of  supply,  poor  in  quality. 
In  addition  to  this  there  is  a  hiatus  of  four  years  need  of  building  to  be  filled 
in.  All  of  this  naturally  conspired  to  create  high  prices,  the  public,  however, 
does  not  know  these  reasons,  and  if  upon  investigation  any  plan  is  found 
that  squints  at  suggested  prices,  it  will  be  the  plan  that  will  be  held  respon- 
sible for  the  prices  and  not  the  true  causes. 

I  know  that  it  is  not  the  purpose  of  your  plan  to  fix  the  price.  Your  members 
are  free  to  sell  at  any  price  they  please,  nevertheless,  when  your  Committee  pub- 
lishes a  higher  price  than  the  current  market,  based  upon  its  conception  of 
market  tendencies,  it  is  in  fact  putting  out  figures  that  are  at  least  to  be  shot 
at  by  the  trade  and  to  that  extent  indirectly  doing  that  which  tends  to  control 
prices  to  a  higher  level. 

If  the  industrial  situation  was  such  that  demand  was  low  and  supply  heavy, 
then  under  the  operation  of  the  "  Rule  of  Reason  "  a  plan  of  this  kind  might  be 
justifiable,  but  when  we  are  on  the  crest  of  a  run-away  market,  I  am  quite  sure 
that  the  law  would  frown  upon  the  plan  that  you  are  working  under. 

I  do  not  want  you  or  your  directors  to  misunderstand.  I  am  not  seeking  to 
meddle  in  your  regional  affairs.  As  you  know,  professionally  my  connection  is 
with  the  National  which  organization  has  nothing  to  do  with  prices,  directly 
or  indirectly.  This  letter  is  written  because  of  the  talk  you  and  I  had  and 
because  of  my  deep  interest  in  the  welfare  of  every  regional  group.  If  any  one 
group  is  attacked,  such  attack  will  reflect  hurtfully  upon  the  entire  industry. 
The  public  mind  is  impatient  and  irritated  over  the  present  conditions,  and, 
every  lumber  group  must  be  as  Caesar's  wife,  above  suspicion. 

It  is  therefore  my  recommendation  that  you  get  your  Board  together  and  pass 
a  formal  resolution  to  discontinue  your  Committee's  work  on  the  list,  and  this 


LUMBER  MANUFACTURERS*   TRADE  ASSOCIATIONS.  43 

because  it  might  be  construed  as  an  effort  to  control  prices,  although  such  is  not 
the  basic  purpose  of  the  plan. 

I  assume,  of  course,  your  group  has  a  method  whereby  you  study  your  cost 
problem.  This  is  legitimate.  Also,  it  is  proper  for  you  to  have  the  widest 
kind  of  market  publicity  of  the  past  prices.  The  activity  that  I  feel  you  should 
abandon  is  any  method  whereby  your  Association  indicates  its  conception  of 
what  lumber  ought  to  bring  next  week.  Courts  have  held  repeatedly  that  it  is 
proper  for  an  industrial  group  to  study  its  cost  problem,  to  study  its  market 
condition,  but  there  is  no  authority  that  will  justify  the  projection  of  market 
conditions  into  the  future. 

I  would  not  have  my  suggestion  in  the  least  discourage  your  group  activity. 
If  there  ever  was  a  time  when  men  in  every  line  of  industry  should  get 
together,  now  is  the  hour.  What  I  am  seeking  is  to  guard  your  group  from 
an  unjust  accusation. 

If  I  have  not  made  myself  entirely  clear,  I  will  be  glad  to  further  advise 
you. 

On  August  1, 1919,  Mr.  Boyle  made  additional  comment  as  follows : 

In  writing  you  yesterday  touching  the  associated  activities  of  your  group, 
I  would  not  have  you  understand  that  any  member  of  your  group  is  not 
legally  authorized  to  issue  any  price  list  that  he  sees  fit.  That  which  I  was 
trying  to  impress  upon  you  was  that  prices  cannot  be  adjusted  through  asso- 
ciation effort. 

If  one  of  your  members  in  whom  the  trade  generally  had  confidence  should 
issue  a  price  list  undoubtedly  many  operators  within  the  industry  would  follow 
the  lead  of  the  one  issueing  the  price  list,  and  if  there  was  no  agreement  or 
concerted  understanding  to  this  effect,  the  mere  fact  that  there  were  a  number 
of  similar  price  lists  would  in  no  wise  embarrass  the  legal  situation.  The 
thing  we  have  got  to  keep  in  mind  is  that  we  cannot  have  uniformity  of 
price  through  agreement,  and  this  whether  the  agreement  is  directly  or  in- 
directly arrived  at,  but  there  may  be  uniformity  of  prices  if  such  prices  are 
the  result  of  constructive  study  or,  as  suggested,  because  one  operator  might 
copy  the  price  list  that  another  operator  issues. 

As  a  result  of  this  opinion  from  Mr.  Boyle,  the  association  changed 
its  method  of  supplying  information  to  R.  D.  Frederick  &  Son  but 
slightly.  They  continued  to  proof-read  his  copy,  but  did  not  openly 
authorize  the  printing  and  distribution  of  same.  Mr.  F.  C.  Knox, 
secretary  of  this  association,  issued  a  bulletin  on  September  5,  1919, 
pertaining  thereto,  as  follows : 

We  have  discontinued  the  printing  of  the  Michigan  Standard  Price  Lists  on 
Hardwood  and  Hemlock  for  free  distribution  to  our  membership,  also  the 
recommended  figures  of  our  Market  Conditions  Committee. 

Hereafter  the  basis  for  values  of  Michigan  hardwoods  and  Hemlock  will  be 
found  in  "  Frederick's  Current  Market  Values,"  which  will  be  printed  from  time 
to  time  as  reflecting  the  current  market  value  on  these  woods,  which  will  be 
issued  at  a  cost  of  50£  each.  Subscriptions  for  this  issue  will  be  received  by  the 
Secretary  and  placed  with  Frederick  &  Son  for  mailing  to  you  at  once.  It  has 
been  thought  best  that  the  subscription  to  this  list  be  handled  through  the  Sec- 
retary's office,  in  order  that  he  may  be  assured  that  all  of  our  membership  re- 
ceive copies  of  the  list.  Please  inclose  your  order  for  number  of  copies  wanted, 
at  50  cents  each,  in  order  to  insure  prompt  mailing  on  the  lists. 


44  LUMBER   MANUFACTURERS  *   TRADE  ASSOCIATIONS. 

Curtailment  of  production. 

The  report  upon  lumber  prepared  by  the  Bureau  of  Corporations 
and  published  in  1914  clearly  shoAved  that,  when  necessary,  lumber 
manufacturers  cooperated  with  each  other  in  curtailing  the  pro- 
duction of  lumber  in  order  to  prevent  an  oversupply  which  would 
necessarily  have  a  tendency  to  lower  the  price.  As  previously  shown 
in  this  memorandum,  in  1915  the  lumber  manufacturers  attempted 
to  induce  the  Federal  Trade  Commission  to  provide  lawful  means 
whereby  this  would  be  accomplished.  No  action  was  taken  in  re- 
gard thereto  by  the  Commission. 

About  this  same  time,  most  of  the  regional  associations  began  to 
collect  statistics  showing  each  week  the  amount  of  lumber  cut, 
ordered,  and  shipped.  In  addition  to  the  actual  figures,  a  barometer 
was  issued  whereby  the  relation  of  the  cut,  orders,  and  shipments 
to  each  other  was  shown  by  colored  columns. 

The  first  barometers  issued  by  the  Southern  Pine  Association  dur- 
ing the  latter  part  of  the  year  1915,  contained  marginal  notes  apply- 
ing to  the  current  situation,  as  follows: 

Market  advancing — increase  production. 

Had  the  current  situation  been  reversed,  marginal  notes  would 
have  applied  as  follows: 

Market  declining — decrease  production. 

These  marginal  notes  were  discontinued  after  the  first  few  issues. 

It  was  also  explained  on  the  barometer  that  when  production  ex- 
ceeded orders  and  shipments,  "  Experience  indicates  an  over  pro- 
duction with  consequent  lowering  of  values."  It  was  further  ex- 
plained that  when  shipments  and  orders  exceeded  production  experi- 
ence indicates  that  values  increase  "provided  production  does  not 
increase  at  a  greater  ratio  than  shipments  and  orders." 

Production  of  lumber  was  materially  curtailed  at  this  time  in  the 
southern  pine  region.  About  the  month  of  October,  1915,  Mr. 
Charles  S.  Keith  issued  a  circular  in  which  he  stated  that — 

A  stimulation  of  production  would  probably  occasion  a  delay  in  the  market 
reaching  a  normal  condition  of  prices. 

Substantial  assistance  in  the  program  for  curtailing  production 
was  given  by  the  lumber  trade  journals. 

COOPERATION  AMONG  REGIONAL  ASSOCIATIONS. 

Purpose  of  cooperation. 

The  lumber  manufactured  in  each  region  is  sold  in  certain  locali- 
ties in  competition  with  that  from  other  regions.  For  example,  in 


LUMBER  MANUFACTURERS '   TEADE  ASSOCIATIONS.  45 

the  Mississippi  Valley  States,  southern  pine,  Douglar  fir,  western 
pine,  and  hemlock  lumber  compete  with  each  other ;  in  States  west  of 
the  Missouri  Kiver,  southern  pine,  Douglas  fir,  and  western  pine 
are  the  principal  competitors,  while  in  the  Middle  Eastern  States, 
hemlock  from  Michigan,  Wisconsin,  and  Pennsylvania  and  southern 
pine  compete  with  each  other.  From  the  data  collected,  it  appears 
to  be  the  aim  and  purpose  of  the  manufacturers  not  only  to  elimi- 
nate price  competition  within  their  respective  associations  but  to 
eliminate,  as  far  as  possible,  price  competition  among  the  competing 
kinds  of  lumber.  The  various  association  committees  charged  with 
the  duty  of  obtaining  information  upon  market  conditions  and  dis- 
seminating it,  secure  all  possible  information  with  reference  to  stocks 
on  hand,  orders  received,  lumber  shipped  and  the  prevailing  market 
price*  of  all  competing  kinds  of  lumber  for  use  at  the  association 
meetings.  At  times,  committees  are  appointed  by  an  association 
to  visit  the  competing  lumber  manufacturers  in  order  to  carry  out 
these  purposes. 

Cooperation  between  Southern  Pine  and  West  Coast  Lumbermen's  Asso- 
ciation. 

Mr.  W.  M.  Beebe,  sales  manager  of  the  Long-Bell  Lumber  Co., 
probably  the  largest  single  producer  of  yellow-pine  lumber,  was 
appointed  chairman  of  the  committee  on  competitive  woods  by  the 
Southern  Pine  Association  at  its  meeting  on  February  24,  1919. 
The  apparent  cause  for  the  appointment  of  this  committee  was  the 
fact  that  Douglas  fir  lumber  was  then  being  sold  in  the  Missouri 
Valley  States  at  $3  to  $6  or  more  per  M  less  than  the  price  asked 
by  the  southern  pine  manufacturers.  Mr.  Beebe  wrote  at  that  time, 
in  part : 

One  thing  is  sure,  fir  is  going  to  come  up  or  yellow  pine  is  going  to  come  down 
eventually. 

while  Mr.  Rhodes,  secretary  of  the  Southern  Pine  Association  wrote : 

Certain  it  is  that  fir  must  advance  as  I  do  not  see  that  Southern  pine  can 
decrease. 

Mr.  Beebe  arranged  to  make  a  personal  trip  to  the  Douglas  fir 
region  for  the  purpose  of  conferring  with  those  manufacturers.  He 
wrote  Secretary  Rhodes  on  March  21,  1919,  in  part : 

I  am  in  receipt  of  yours  of  March  19th  regarding  the  relative  competitive 
prices  of  fir,  yellow  pine  and  other  woods. 

Fir,  as  I  understand  it,  is  a  little  weaker  at  the  present  moment  than  when 
that  list  was  gotten  out. 

I  expect  to  go  to  the  Pacific  Coast  within  a  very  few  days  and  am  going  to  try 
to  take  along  considerable  data  and  use  it  to  as  good  advantage  as  possible  with 
some  of  the  fir  manufacturers. 


46  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Upon  his  return  from  this  trip,  Mr.  Beebe  wrote  Mr.  R.  A.  Long, 
president  of  his  own  company,  under  date  of  April  21,  1919,  in  part 
as  follows: 

I  returned  to  the  office  this  morning.  While  on  the  Coast,  I  had  the  oppor- 
tunity to  talk  to  a  number  of  fir  manufacturers  in  Portland,  Tacoma  and  Seattle. 
Also  had  the  opportunity  of  talking  to  about  twenty-five  manufacturers  at  a 
meeting  which  they  were  having  in  Tacoma.  I  had  some  data  with  me  regard- 
ing the  prices  of  fir  and  yellow  pine,  comparable  grades.  I  had  our  monthly 
sales  report  as  to  the  prices  received  by  the  Kansas  City  people  and  showed 
these  manufacturers,  I  think,  conclusively,  that  they  were  selling  their  product 
$4  to  $5  per  M  less  on  an  average  than  was  necessary  except  for  competition 
among  themselves. 

It  is  startling  how  little  after  all  the  better  posted  manufacturers  care  and 
know  about  prices  and  conditions  in  the  Middle  West,  largely  for  the  reason 
that  they  sell  nearly  their  entire  product  through  commission  men  and  ^whole- 
salers. 

I  left  with  Mr.  Bloedell  a  comparative  statement  of  the  prices  of  fir  and  yel- 
low pine  and  he  stated  that  he  would  give  a  great  deal  of  publicity  to  the  same. 
This  was  a  statement  made  up  for  me  by  Edward  Hines.  Mr.  Bloedell  said  it 
would  do  a  great  deal  of  good. 

Mr.  Beebe  made  similar  reports  to  other  southern  pine  manufac- 
turers of  the  results  of  his  western  trip.  It  should  also  be  borne  in 
mind  that  at  this  time  the  prices  for  fir  lumber  advanced  very  rap- 
idly, as  is  shown  in  another  section  of  this  report.  It  appears 
that  such  matters  were  also  discussed  at  meetings  held  under  the 
auspices  of  the  National  Lumber  Manufacturers'  Association.  A 
meeting  of  this  association  was  held  at  Chicago,  111.,  about  April  15 
to  IT,  1919.  Mr.  R.  B.  Allen,  secretary  of  the  West  Coast  Lumber- 
men's Association,  attended  this  meeting,  and  from  there  went  to 
Washington,  D.  C.  He  wrote  Mr.  R.  H.  Burnside,  of  Raymond, 
Wash.,  from  Washington,  D.  C.,  on  April  26,  1919,  in  part: 

Am  here  for  a  few  days  following  the  Carnival  of  Intellect  in  Chicago.  Can- 
not quite  figure  out  that  anything  very  important  was  accomplished  there,  but  it 
was  intensely  interesting  in  spots. 

Had  a  great  many  inquiries  for  you — there  were  others  besides  myself  that 
regretted  your  inability  to  be  there. 

As  usual  the  South  was  strongly  mobilized  for  the  occasion.  They  were  in- 
clined to  ride  us  a  bit  for  low  prices.  Putnam  in  just  about  the  opening  address 
took  several  nasty  slaps  at  the  West  Coast — finally  saying  that  what  we  needed 
out  there  was  brains  and  if  we  would  only  pay  the  price,  the  South  would  gladly 
furnish  us  with  the  requisite  gray  matter.  When  he  finished  I  took  a  shot  at 
him. 

Mr.  J.  H.  Austin,  chairman  of  the  Southern  Pine  Association 
committee  on  sales  and  distribution,  wrote  Mr.  R.  P.  Arkley,  assist- 
ant sales  manager  of  the  St.  Paul  &  Tacoma  Lumber  Co.  on  April 
17,  1919,  in  part : 

This  writer  has  been  delayed  In  replying  to  your  letter  of  the  10th  due 
to  the  fact  that  he  has  been  attending  the  meeting  of  the  National  Lumber 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  47 

Manufacturers  that  is  being  held  in  Chicago  this  week.  While  attending 
this  meeting  he  had  the  pleasure  of  meeting  the  Secretary  of  your  Associa- 
tion, Mr.  Allen,  and  he  gave  us  a  very  reassuring  statement,  which  would 
indicate  that  the  people  on  the  West  Coast  are  rapidly  realizing  that  there  is 
no  reason  why  they  should  sell  their  lumber  at  less  than  cost,  and  that  they 
will  soon  get  their  prices  up  in  line  with  the  prices  that  we  are  obtaining  in  this 
territory  for  our  product. 

Mr.  Austin  further  wrote  in  this  same  letter: 

It  might  be  interesting  for  you  to  know  that  we  have  been  selling  our  dimen- 
sion in  this  market  at  $3  to  $5  per  M  more  than  sales  of  similar  items  made 
by  our  West  Coast  friends  and  the  odd  thing  of  it  is  that  the  dealers  who 
purchase  your  stock  along  with  our  pine  make  no  difference  in  their  retail 
prices  between  the  two  woods. 

Mr.  G.  C.  Robson,  chairman  of  the  sales  managers'  committee  of 
the  Northern  Hemlock  &  Hardwood  Manufacturers  of  Wisconsin, 
was  also  present  at  this  meeting  of  the  national  association.  On 
April  17,  1919,  he  wrote  the  president  of  his  association  in  part: 

The  yellow  pine  people  are  surely  taking  care  of  their  situation  in  excellent 
shape  and  the  West  Coast,  from  what  Mr.  Allen  states,  is  going  to  get  right  in 
line  themselves. 

Arrangements  were  usually  made  whereby  telegrams  giving  the 
very  latest  information  upon  stocks  on  hand  and  market  prices  of 
all  competitive  woods  were  received  for  use  at  the  association  meet- 
ings, where  prices  or  market  conditions  were  discussed. 

In  preparation  for  the  meeting  of  the  fir  manufacturers  held  May 
28, 1919,  Mr.  E.  R.  Hogg,  of  the  Atlas  Lumber  Co.,  wrote : 

It  was  decided  last  night  to  have  another  meeting  in  Tacoma  next  Wednes- 
day the  28th  and  everybody  is  supposed  to  see  that  everybody  in  his  neighbor- 
hood is  advised.  I  understand  that  by  that  time  there  will  be  further  infor- 
mation regarding  the  situation  in  the  South,  that  will  be  of  immense  interest 
and  value. 

The  Union  Lumber  Co.,  of  Union  Mills,  Wash.,  wired  S.  H.  Chat- 
ten  Lumber  Co.,  of  Kansas  City,  on  May  26,  1919,  as  follows : 

Have  four  or  five  large  manufacturers  wire  collect  night  letters  tomorrow 
giving  present  market  conditions  similar  to  those  messages  sent  Chattcn 
last  week,  must  have  these  by  morning  of  28.  Large  volume  yard  stock  orders 
offering.  Wholesalers  now  paying  No.  4  and  buying  everything  offered. 

The  replies,  if  any,  to  this  wire  were  not  obtained.  Mr.  E.  C.  Hole, 
manager  of  the  American  Lumberman,  wired  Mr.  Hogg  on  May  27 
for  use  at  this  meeting  as  follows : 

Large  amount  of  yellow  pine  orders  have  been  booked  in  last  three  weeks. 
Stocks  are  broken  and  prices  are  advancing,  also  shortage  of  labor  in  South. 
Nor.  lumber  was  advanced  and  getting  very  scarce.  Prominent  Cleveland  whole- 
saler here  Saturday  going  North  to  buy  all  he  could.  Personal  letter  from 
President  large  Kansas  City  Bank  quotes  prominent  Southern  pine  lumber  man 
as  expressing  doubt  on  wisdom  of  getting  prices  on  Southern  pine  any  higher. 


48  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Southern  pine  people  have  had  several  conferences  on  advisability  of  holding 
steady  market.  Retailers  feel  that  manufacturer  should  have  in  mind  continu- 
ation for  several  years  of  the  splendid  momentum  of  building  movement  now 
on  all  over  the  country  and  should  not  get  prices  too  high. 

At  this  meeting  on  May  28,  discount  sheet  No.  5  was  adopted  as 
previously  shown.  Mr.  R.  W.  Hunt,  sales  manager  of  the  Weyer- 
haeuser Timber  Co.,  wrote  the  Weyerhaeuser  Sales  Co.  of  St.  Paul  in 
regard  to  this  meeting,  in  part  as  follows : 

We  are  today  sending  you  a  supply  of  discount  5  which  it  was  decided  by  the 
majority  of  the  manufacturers  on  the  Coast  should  be  put  into  effect  immedi- 
ately. The  advance  at  the  time  it  was  made,  did  not  appear  to  us  to  be  called 
for  although  the  Committee  on  Values  merely  leveled  up  the  prices  of  fir  lumber 
to  a  competitive  basis  with  yellow  pine  based  on  a  Kansas  City  and  Chicago 
rate  of  freight. 

Cooperation  between  Wisconsin  and  Michigan  hemlock  manufacturers. 

The  Hemlock  manufacturers  of  Wisconsin  and  Michigan,  by  virtue 
of  their  location,  supply  much  the  same  territory  with  lumber.  On 
account  df  this  condition,  committees  representing  the  Wisconsin  and 
Michigan  associations  met  from  time  to  time  in  order  to  further  the 
interests  of  each  other.  The  following  letter  describing  the  joint 
meeting  of  representatives  of  these  two  associations,  held  at  Mil- 
waukee, Wis.,  on  December  30, 1919,  is  typical.  It  should  be  borne  in 
mind  that  this  meeting  was  held  after  the  Federal  Trade  Commis- 
sion had  well  begun  its  survey  and  after  receipt  of  the  foregoing 
legal  opinion  from  Mr.  Boyle. 

Mr.  Wrape,  who  was  chairman  of  the  market  conditions  committee 
of  the  Michigan  association,  wrote  Mr.  H.  S.  Dewey,  of  the  Edward 
Hines  Lumber  Co.,  on  January  5,  1920,  with  reference  to  this  joint 
meeting,  as  follows: 

I  was  disappointed  in  not  seeing  you  at  Milwaukee  on  December  30th  as  I  noi 
only  wanted  to  talk  over  conditions  with  you  but  wished  to  thank  you  for  the 
very  nice  box  of  cigars  which  I  received  from  you  on  Christmas  Eve.  They 
are  very  fine  and  I  thoroughly  enjoyed  them. 

I  also  received  copy  of  the  advertisement  of  the  Edward  Hines  Lumber  Com- 
pany in  the  Daily  News  of  December  31st,  which  I  have  read  with  much 
interest. 

In  your  last  letter  you  intimated  that  there  was  a  sentiment  growing  among 
the  larger  manufacturers  of  lumber  to  stabilize  prices  on  the  basis  prevailing 
about  thirty  days  ago. 

It  seems  to  be  very  hard  to  accomplish  this  object  right  now.  There  was 
no  evidence  whatever  of  any  effort  being  made  along  this  line  at  the  Milwaukee 
meeting.  Prices  were  advanced  from  $10.00  to  $60.00  per  M  much  easier  and 
with  less  consideration  than  was  given  to  a  general  advance  of  $2.00  per  M  less 
than  a  year  ago. 

It  is  possible  that  conditions  warrant  these  extreme  advances,  but  I  have 
talked  with  several  manufacturers  in  Michigan  and  they  are  of  the  opinion 
that  we  are  going  ahead  at  a  trifle  too  rapid  pace  and  that  something  should 
be  done  to  check  this  condition. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  49 

Write  me  when  you  have  time,  with  any  suggestions  that  you  have  to  offer 
and  whether  the  feeling  which  I  have  described  exists  in  any  other  section  of 
the  country  that  you  know  of. 

The  foregoing  is  merely  illustrative  of  the  continual  cooperative 
activities  between  the  lumber  manufacturers  of  the  various  regions. 

Early  in  the  year  1916  the  demand  for  lumber  became  very  weak. 
The  Southern  Pine  Manufacturers  held  a  general  meeting  at  Alex- 
andria, La.,  on  April  25,  1916.  Mr.  Keith,  president  of  the  associ- 
ation, sent  detailed  information  to  be  used  at  this  meeting  with  an 
announcement  of  the  policy  which  his  own  mills  would  follow.  This 
policy  was  to  regulate  production  on  the  basis  of  the  weekly  barom- 
eter reports  of  the  association,  and  it  was  further  explained — 

that  where  the  volumes  of  orders  received  is  any  per  cent  below  the  amount 
produced  per  week  for  all  of  the  mills  regardless  of  what  our  own  order  file 
conditions  may  disclose,  I  want  the  hours  of  operation  for  the  current  week 
reduced  by  that  per  cent. 

Curtailment  upon  a  very  large  scale  was  immediately  instituted 
among  the  southern  pine  mills.  A  further  meeting  of  the  Southern 
Pine  Manufacturers  was  held  in  Chicago  on  May  30,  1916,  which 
continued  until  the  convention  of  the  National  Lumber  Manufac- 
turers Association  held  June  1  and  2. 

Within  a  week  after  this  meeting  was  adjourned,  curtailment 
among  the  southern  pine  mills  became  even  greater  and  varied  from 
a  complete  shutdown  to  either  one  or  two  days  each  week.  At  the 
same  time,  organized  curtailment  of  one  day  per  week  was  begun 
among  the  Douglas  fir  manufacturers  and  continued  until  the  month 
of  August.  A  curtailment  of  the  western  pine  manufacturers  of 
the  Inland  Empire  was  also  begun  and  maintained  for  a  period  of 
time. 

The  curtailment  of  production  by  the  fir  manufacturers  was  begun 
as  the  result  of  a  meeting  held  at  Tacoma,  Wash.,  on  June  8,  1916. 
Mr.  J.  H.  Bloedell,  president  of  the  West  Coast  Lumbermen's  Asso- 
ciation, issued  a  call  for  this  meeting  as  follows : 

Lumber  manufacturers  of  Oregon,  Washington,  and  British  Columbia  will 
meet  at  the  Tacoma  Hotel,  Tacoma,  Washington,  on  Thursday,  June  8,  at 
1.30  P.  M.  for  a  general  discussion  of  manufacturing  and  market  conditions. 
The  curtailment  which  has  been  made  by  individual  Southern  pine  mills  will 
come  up  for  discussion.  District  committees  have  been  appointed  to  call  upon 
the  mills  to  ascertain  if  they  propose  any  curtailment.  This  will  be  one  of  the 
largest  and  most  interesting  meetings  of  the  year.  Remember  the  date,  and 
be  in  attendance. 

The  extent  of  the  curtailment  was  discussed  by  Mr.  E.  R.  Hogg,  of 
the  Atlas  Lumber  Co.,  who  wrote  on  July  15,  1916,  in  part : 

Notice  you  are  not  out  a  great  deal  on  account  of  your  yellow  pine  people 
not  getting  into  the  scramble  for  business.  That  is  the  way  we  all  ought  to  do. 
If  we  could  hold  off  when  the  market  is  weak  conditions  would  be  ve.ry  much 


50  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

better,  but  we  have  been  down  18  months  in  the  last  3  years  holding  the 
umbrella  over  the  other  fellow  and  have  decided  that  we  will  have  to  play  the 
game  the  same  as  the  majority,  but  at  the  same  time,  there  is  about  a  20% 
curtailment  in  our  production  on  the  Coast  here.  Our  Mr.  Patten  has  been  look- 
ing after  this  curtailment  for  the  last  two  or  three  weeks  and  our  own  mill 
and  practically  80%  of  the  others  are  curtailing  in  various  amounts  from  16 
to  20%. 

During  the  war  period  all  industries  were  urged  to  increase  pro- 
duction as  much  as  possible.  A  meeting  of  the  Southern  Pine  Asso- 
ciation was  held  February  19  and  20,  1918,  at  New  Orleans.  The 
proceedings  of  this  convention  were  published  by  the  association  in 
a  pamphlet  entitled,  "  Pine  and  Patriotism."  Mr.  Charles  S.  Keith, 
president  of  the  association,  delivered  an  address  at  this  meeting  in 
which  he  urged  the  importance  and  practicability  of  individual  as 
distinguished  from  concerted  restriction  of  production  on  the  basis 
of  the  association's  barometer  reports.  Upon  this  subject  he  stated 
in  part : 

In  the  absence  of  any  law  legalizing  trade  agreements  so -that  they  can  be 
enforced,  they  are  of  no  avail.  We  can  do  legally  individually  now  all  those 
things  which  we  cannot  do  collectively  by  agreement.  When  you  see  produc- 
tion exceeding  shipments  and  stocks  of  lumber  accumulating  you  should  know 
beyond  doubt  the  ultimate  effect  of  such  a  situation  is  price  recession.  When 
conditions  indicate  sales  or  shipments  in  excess  of  production,  stocks  are  being 
reduced  and  orders  increased,  common  sense  should  tell  us  that 'values  under 
such  conditions  are  bound  to  increase  and  under  such  condition  no  lumberman 
should  sell  against  the  future.  When  conditions  demonstrated  by  the  barometer 
show  production  in  a  dangerous  condition  we  should  apply  the  remedy  in- 
dividually without  consulting  our  neighbors  and  without  discussing  it  with  our 
friends,  trusting  to  their  business  acumen  and  good  sense  to  do  likewise. 

It  is  significant  to  note  that  during  the  last  five  months  of  1918 
the  production  of  southern  pine  lumber  ranged  from  23  to  38  per  cent 
below  "  normal."  In  the  first  full  week  following  the  Chicago  con- 
ference on  November  22,  1918,  hereinbefore  referred  to,  the  produc- 
tion of  southern  pine  lumber  fell  from  .32  per  cent  below  "  normal "  to 
39  per  cent  below  "  normal,"  though  stocks  on  hand  at  that  time  were 
only  76  per  cent  of  "  normal." 

CHICAGO  RETAIL  LUMBER  DEALERS'  ASSOCIATION. 

The  retail  lumber  dealers  of  Chicago  maintain  a  local  associa- 
tion. There  are  about  45  to  50  members  of  this  association,  which 
includes  practically  all  of  the  large  local  dealers  and  a  very  large 
percentage  of  all  of  the  dealers  of  the  city  and  county.  The  ar- 
ticles of  agreement  under  which  this  association  has  been  main- 
tained for  many  years  apply  only  to  local  trade  and  specifically  state 
that  they  "shall  not  apply  to  any  interstate  trade,  commerce  or 
business." 


LUMBER   MANUFACTURERS*   TRADE  ASSOCIATIONS.  51 

Compilation  of  costs. 

One  of  the  principal  activities  of  this  association  is  the  compila- 
tion of  costs.  Average  costs  of  doing  business  are  ascertained  from 
time  to  time  by  the  association  and  furnished  to  each  member  there- 
of. The  method  of  ascertaining  their  costs  is  described  in  article 
3,  section  3,  of  the  by-laws  which  is  as  follows: 

Section  3.  In  the  judgment  of  the  Association  the  following  fundamental 
elements  constitute  the  basis  of  ascertaining  Retail  Selling  Prices  of  Lum- 
ber Based  upon  Average  Cost : 

(a)  The  current  wholesale  market  prices,  F.  O.  B.  Cars  in  the  Retail 

Lumber  Dealer's  Yard ; 

(b)  The  average  cost  of  Yarding,  Selling  and  Delivering; 

(c)  Insurance  and  Taxes  of  all  kinds; 

(d)  Reasonable  Allowance  for  Depreciation; 

(e)  Reasonable  Allowance  for  Bad  Debts; 

(f)  Reasonable  Administrative  and  Executive  Expenses; 

(g)  Rent  and  Other  Fixed  Charges; 

(h)   Overhead  Expenses,  and  all  other  Expenses  pertaining  to  the  Busi- 
ness of  the  Retail  Lumber  Dealer; 
(i)   Interest  at  six  per  cent  per  annum   on   Capital   employed  in  the 

Business. 

In  adopting  the  foregoing  method  of  ascertaining  the  Retail  Selling  Prices 
of  Lumber  Based  upon  Average  Cost,  the  members  of  the  Association  ex- 
pressly agree  that  their  Average  Merchandising  Profit  shall  not  exceed  Ten 
per  cent  reckoned  on  Sales. 

Reports  of  sales. 

Daily  reports  showing  sales  made  are  furnished  to  the  secretary 
by  each  member,  as  provided  by  article  14,  section  1,  of  the  by-laws 
which  is  as  follows : 

Section  1.  Daily  reports  shall  be  made  by  each  member  of  the  Association  to 
the  Secretary  at  the  close  of  each  day's  business,  giving  the  amount  in  dollars 
and  cents  of -all  shipments  (which  are  hereby  classified  as  "  Retail  Trade  Sales  ") 
consisting  of  Lumber,  Hardwood  Flooring,  Lath,  Shingles,  Posts,  Plaster  Board, 
Wall  Board,  Patent  Roofings,  Building  Papers,  Glass  and  Millwork  of  all  kinds, 
sold  and  delivered  for  use  within  Cook  County,  Illinois ; 

Excepting  the  following  shipments  which  are  hereby  classified  as  "  Wholesale 
Trade  Sales,"  and  which  are  not  to  be  included  in  the  Daily  reports: 

(a)  Shipments  to  members  of  this  Association. 

(b )  Shipments  to  steam  railroads,  including  Union  Stock  Yards  &  Transit  Co. 

(c)  Shipments  to  International  Harvester  Co.,  American  Car  &  Foundry 

Co.,  the  Pullman  Company  and  other  car  builders. 

(d)  Shipments  made  from  outside  of  Cook  County,  Illinois,  in  cargo  or  car- 

load lots  to  any  purchaser,  excepting  to  contractors  and  builders  or 
to  the  contracting  and  building  trade.  This  exception  (d)  shall 
apply  only  to  industries  which  are  large  and  frequent  users  of  lum- 
ber, and  are  accustomed  to  buy  in  carload  lots  and  take  the  entire 
carload  direct  from  the  car,  and  use  the  lumber  or  other  material  for 
crating  purposes,  or  as  the  raw  material  from  which  their  products 
are  manufactured. 

(e)  Shipments  made  direct  to  the  United  States  of  America. 


52  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Pooling  of  business. 

A  rather  striking  activity  of  the  members  of  the  Chicago  Retail 
Lumber  Dealers  Association  is  revealed  in  their  articles  of  agree- 
ment whereby  all  retail  lumber  business  in  Chicago  is  allocated 
among  the  members  of  the  association.  Those  members  selling  more 
than  their  allotted  amount  pay  a  certain  percentage  of  the  over- 
shipment  into  the  association  treasury,  while  those  members  selling 
less  than  their  allotted  amount  are  paid  out  of  the  association 
treasury  upon  such  undershipment.  Article  12,  section  1,  contains 
this  agreement,  which  is  as  follows : 

Section  1.  A  fund  is  hereby  established  called  the  "  General  Fund  "  through 
which  the  payments  hereinafter  provided  shall  be  made,  and  said  payments  shall 
be  reckoned  upon  amounts  in  dollars  and  cents. 

Each  member,  whose  shipments  of  Retail  Trade  Sales  (as  classified  in  Sec- 
tion 1  of  Article  XIV)  are  more  in  any  month  than  his  allotted  percentage  for 
that  month,  shall  pay  into  the  General  Fund,  Ten  per  cent  of  the  amount  of  his 
Overshipments  for  that  month ;  and  each  member,  whose  shipments  of  Retail 
Trade  Sales  (as  classified  in  Section  1  of  Article  XIV)  are  less  in  any  month 
than  his  allotted  percentage  for  that  month,  shall  be  paid  out  of  the  General 
Fund,  Ten  per  cent  of  the  amount  of  his  Undershipments  for  that  month  down 
to  Seventy-five  per  cent  of  his  allotment  for  that  month.  If  a  member  ships  less 
than  Seventy-five  per  cent  of  his  allotment  during  any  one  month,  he  shall  be 
paid  said  Ten  per  cent  on  only  Twenty-five  per  cent  of  his  allotment  for  that 
month,  and  the  balance  shall  be  held  in  abeyance  until  the  end  of  the  year ;  and 
if  at  the  end  of  the  year  he  shall  have  shipped  Seventy-five  per  cent  of  his 
allotment  for  that  year  the  amount  so  held  in  abeyance  shall  then  be  paid  to 
him,  otherwise  it  shall  belong  to  the  Association. 

The  following  example  will  illustrate  the  operation  of  the  foregoing  Seventy- 
five  per  cent  provision: 

If  a  member's  allotment  for  any  month  is  $20,000.00,  and  his  shipments  are 
$12,500.00  for  such  month,  he  would  have  undershipped  $7,500.00,  and  his  credit 
balance  would  be  $750.00.  Such  member  would  be  expected  to  ship  that  month 
not  less  than  $15,000.00,  or  Seventy-five  per  cent  of  his  allotment,  and  conse- 
quently he  would  be  paid  Ten  per  cent  upon  only  $5,000.00  of  his  Undership- 
ments, or  the  sum  of  $500.00,  and  the  remaining  $250.00  of  his  credit  balance  for 
that  month  would  be  held  in  abeyance  until  the  end  of  the  year,  and  it  would 
then  be  paid  to  him,  provided  his  shipments  for  the  year  equal  Seventy-five  per 
cent  of  his  allotment  for  that  year ;  but  if  his  shipments  for  that  year  should 
fall  below  the  required  Seventy-five  per  cent  of  his  allotment  for  the  same  year, 
then  said  sum  of  $250.00,  and  any  other  moneys  which  may  accrue  under  this 
Article  would  belong  to  the  Association. 

It  is  necessary  to  change  the  allotment  as  new  members  are  added 
to  the  association  or  where  a  member  discontinues  his  membership. 

The  allotment  in  effect  on  February  1,  1919,  as  per  December, 
1918,  report,  among  the  members  of  this  association  under  this  agree- 
ment was  as  follows : 

Allotted  per  cent. 

1.  Andrews  Lumber  &  Mill  Co 1.48 

2.  Bader,  John,  Lumber  Co •       .92 

3.  Rader,  Peterson,  Cook  Co ;,'_™!_™™™_™™-'i ™J.        .87 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  53 


Allotted  per  cent. 

4.  Barnes  &  Borden  Lumber  Co 0.  73 

5.  Barr  &  Collins 2.30 

6.  Bay  State  Lumber  Co .93 

7.  Berwyn  Lumber  &  Coal  Co .40 

8.  Builders   Lumber   Co .59 

9.  Burns,  John  E.,  Lumber  Co 2.  58 

10.  Chicago  &  Riverdale  Lumber  Co .  53 

11.  Deacon,  J.  C.,  Co ; .74 

12.  De  Vries,  C.  J.,  &  Co 2.11 

13.  Evanston  Lumber  Co 1.  03 

15.  Green,  George,  Lumber  Co 1.46 

16.  Heitmann  Lumber  Co 2.38 

17.  Hermosa  Lumber  Co .68 

18.  Hettler,  Herman  H.,  Lumber  Co , 4.  97 

19.  Hines,  Edward,  Lumber  Co 25.22 

20.  Howes  Lumber  Co 2.62 

21.  Hubbard  Woods  Lumber  &  Coal  Co .36 

22.  Kemler  Lumber  Co .84 

23.  Lakeside  Lumber  &  Manufacturing  Co .60 

24.  Lord  Lumber  Co ; .87 

25.  Manhattan   Lumber  Co 1.08 

26.  Mears-Slayton  Lumber  Co 2.45 

27.  North  Side  Lumber  &  Timber  Co 1.  48 

28.  North  Western  Lumber  Co 1.  23 

29.  Pilsen    Lumber   Co 3.38 

30.  Pulaski  Lumber  Co .98 

31.  Rietz,  H.  &  A.  Lumber  Co_'_ .36 

32.  Rittenhouse  &  Embree  Co 10.11 

33.  Schillo,  Adam,  Lumber  Co 2.22 

34.  Schrieber,  Wm.  C.,  Lumber  Co .62 

35.  Soper  Lumber  Co .90 

36.  Stewart,  A.  T.,  Lumber  Co 1.  65 

37.  Street,  Chatfield,  Lumber  Co 1.60 

38.  Thornton-Claney  Lumber  Co 4. 15 

39.  Winnetka  Coal-Lumber  Co : .  52 

40.  Zeis,  O.  M.,  Lumber  Co .96 

41.  Fifty-Ninth  Street  Lumber  Yard,   (not  incorporated) 1.75 

42.  Archer  Lumber  Co .70 

43.  Chicago   Standard  Lumber  Co .97 

44.  Liberty  Lumber  &  Mill  Co .43 

45.  Lurya,  I.,  Lumber  Co 2.  75 

4fi.  Lord  &  Bushnell  Co 4.  50 

100.00 


PART  II 


SOUTHERN  PINE  ASSOCIATION 
OF  NEW  ORLEANS,  LA. 


91321°— 22 5  55 


LETTER  OF  TRANSMITTAL. 


FEDERAL  TRADE  COMMISSION, 

Washington,  February  18,  1921. 
Hon.  WILLIAM  M.  CALDER, 

United  States  Senate,  Washington,  D.  C. 

MY  DE"AR  SENATOR  :  In  further  response  to  your  letter  of  January 
11  in  which  you  inform  the  Commission  that  a  report  forwarded 
to  Congress  by  the  Federal  Trade  Commission  on  the  lumber  in- 
dustry has  been  transferred  to  the  special  Committee  on  Housing 
and  Reconstruction,  of  which  you  are  chairman,  and  in  which  you 
further  say  that  your  committee  would  be  glad  from  time  to  time 
to  have  the  Commission  transmit  to  it  such  information  in  respect 
to  the  Commission's  lumber  investigation  as  it  may  regard  of  service 
to  your  committee,  I  beg  leave  to  submit  to  your  committee  additional 
letters,  documents,  and  a  summary  of  the  same  pertaining  to  the 
lumber  industry  for  your  consideration. 
Cordially  yours, 

THE  FEDERAL  TRADE  COMMISSION, 

HUSTON  THOMPSON,  Chairman. 
56 


Part  2.— SOUTHERN  PINE  ASSOCIATION. 


INTRODUCTION. 

Pursuant  to  the  request  of  the  Hon.  William  M.  Calder,  chairman 
of  the  Committee  on  Housing  and  Reconstruction,  that  information 
in  regard  to  the  lumber  industry  which  the  Federal  Trade  Com- 
mission deems  of  service  be  forwarded  from  time  to  time  to  said 
committee,  there  are  herewith  transmitted  certain  documents  and 
letters,  together  with  this  summary  of  matters  therein  contained. 
The  summary,  however,  rests  in  part  upon  data  transmitted  to  the 
committee  on  January  10  and  to  a  small  extent  upon  certain  docu- 
ments still  retained  in  this  Commission's  files.  The  Commission 
also  has  large  quantities  of  supporting  data  which  it  is  unneces- 
sary to  now  transmit  to  the  committee.  The  letters  without  signa- 
ture were  carbon  copies  from  the  files  of  the  lumbermen  who  wrote 
them,  and  who  can  be  identified  if  the  committee  so  desires. 

The  letters  and  documents  relate  chiefly  to  the  activities  of  the 
Southern  Pine  Association,  of  New  Orleans,  La.,  which  represents 
a  larger  production  than  any  other  association,  and  comprises  mills 
in  Oklahoma,  Arkansas,  Texas,  Louisiana,  Mississippi,  Alabama, 
Georgia,  and  Florida. 

TRADE  BAROMETER  DEVICE. 

The  operations  of  the  Southern  Pine  Association  center  around 
the  use  of  a  device  known  as  a  trade  barometer,  by  which,  through 
concerted  action,  the  association  instructs  its  membership  how  to 
restrict  production  and  thereby  to  increase  the  price  of  lumber,  by  an 
artificial  control  of  supply  as  balanced  against  current  demand. 

This  barometer  is  issued  to  the  members  of  the  association  weekly. 
It  is  portrayed  on  the  right-hand  side  of  a  sheet  of  paper  and  con- 
sists of  a  bulb  out  of  which  arise  three  perpendicular  tubes.  The 
first  tube  is  designated  by  the  word  orders,  the  second  by  the  word 
production,  and  the  third  by  the  word  shipments. 

In  order  to  make  the  information  portrayed  by  the  barometer 
striking  to  the  eye,  red  colors  are  used  in  the  bulb  and  tubes. 

Whenever  the  members  see  that  the  red  in  the  middle  tube  en- 
titled production  stands  higher  than  the  red  in  the  first  and  third 
tubes  known  as  orders  and  shipments,  they  see  at  once  that  produc- 
tion must  be  decreased  on  the  theory  that  if  it  is  not  there  will  be 
an  oversupply  in  the  market  which  will  force  down  prices. 

57 


58  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

If,  however,  the  barometer  shows  that  the  red  of  the  middle  tube, 
indicating  production,  is  below  the  red  in  the  other  two  tubes,  indi- 
cating orders  and  shipments,  then  the  members  see  that  supply  is 
below  demand  and  that  higher  prices  can  be  obtained. 

This  device  for  restricting  production  was  inaugurated  in  1915. 
At  that  time  there  was  printed  on  the  upper  left-hand  corner  of  the 
barometer  and  just  outside  of  the  order  tube  the  words  market  ad- 
vancing. Directly  opposite  in  the  upper  right-hand  corner  and  just 
outside  the  shipment  tube  appeared  the  word  increase  production. 
On  the  lower  left-hand  corner  were  the  words  market  declining,  and 
just  opposite  on  the  lower  right-hand  corner  the  words  decrease 
production. 

Thus  the  height  of  the  red  color  in  the  respective  tubes  auto- 
matically indicated  which  of  these  instructions  were  to  be  applied. 

The  theory  of  the  device  was  described  by  Mr.  Charles  S.  Keith, 
president  of  the  association,  in  a  letter  of  September  18,  1915,  to 
J.  H.  Kirby,  as  follows : 

The  Association  will  shortly  get  out  a  weekly  barometer,  which  has  been 
submitted  to  our  counsel  and  which  meets  with  their  approval.  This  barometer 
will  automatically  forecast  market  conditions,  and  it  is  based  on  orders  received 
and  shipments  made.  Where  the  shipments  exceed  the  orders,  it  indicates  an 
advancing  market,  and  whenever  the  reverse  is  true  it  indicates  a  falling  mar- 
ket. Then  once  a  month  we  will  get  out  another  barometer  based  on  the  pro- 
duction, which  will  indicate  an  advancing  market  when  shipments  are  in  excess 
of  production,  and  a  falling  market  when  the  reverse  is  true,  advising  increase 
of  production  when  the  orders  and  shipments  are  in  advance  of  production  and 
a  decrease  in  production  when  the  production  is  in  excess  of  orders  and  ship- 
ments. This  will  give  the  information  graphically. 

Shortly  after  the  barometer  was  circulated  among  the  association 
members,  Mr.  W.  H.  Bissell,  president  of  the  Wausau-Southern  Lum- 
ber Co.,  wrote  to  Mr.  Charles  S.  Keith,  president,  and  Mr.  J.  E. 
Rhodes,  secretary  and  manager  of  the  Southern  Pine  Association, 
advising  that  the  words  increase  production  be  taken  off,  stating 
that  "  this  is  just  the  condition  that  we  wish  to  avoid."  Following 
this  he  said,  "  is  it  not  possible  that  some  of  our  members  might  con- 
strue your  weekly  letter,  bearing  this  label,  as  advice  from  our  asso- 
ciation, to  cut  loose  and  resume  night  sawing  with  their  mills?"  and 
again,  "  Some  cautionary  advice  should  be  inserted,  bringing  home 
to  our  members  the  truth  of  the  old  adage,  '  Do  not  kill  the  goose 
that  lays  the  golden  eggs.'  r 

Mr.  iBissell's  advice  was  followed  and  the  four  phrases,  market 
advancing,  increase  production,  and  market  declining,  decrease  pro- 
duction, were  removed.  Mr.  Keith  informed  Mr.  Bissell  in  a  letter 
of  November  1st,  1915,  as  follows: 

In  preparing  the  barometer,  the  attorneys  thought  that  if  we  were  going  to 
show  "  decrease  production "  thereon,  "  increase  production "  ought  to  go  on 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  59 

too';  so  while  we  are  not  advising  our  people  what  to  do,  the  barometer  itself 
will  tell  the  story. 

It  should  be  stated  that  while  these  four  phrases  were  removed, 
there  still  remained  beneath  the  barometer  the  following  language : 

TRADE  BAROMETER. 

Whenever  Shipments  or  Orders  are  below  Production,  experience  indicates  an 
over-production,  with  consequent  lowering  of  values. 

Experience  indicates  that  whenever  Shipments  or  Orders  are  above  Produc- 
tion, values  increase,  provided  Production  does  not  increase  at  a  greater  ratio 
than  Shipments  and  Orders. 

The  foregoing  quotation  appeared  beneath  the  barometer  continu- 
ously until  October,  1919. 

It  should  be  noted  in  respect  to  the  date,  October,  1919,  that  at  this 
time  the  Commission  was  preparing  to  make  an  investigation  of  the 
lumber  industry  as  requested  by  the  Department  of.  Justice  but  had 
not  yet  actually  begun.  However,  the  fact  of  this  request  had  been 
ascertained  and  had  been  spread  through  the  industry.  Shortly  after 
this,  the  language  just  quoted  was  removed. 

In  order  to  inform  the  members  what  information  the  association 
had  upon  which  it  moved  the  red  up  or  down  in  the  tubes,  there  was 
set  forth  on  the  same  page  to  the  left  of  the  barometer,  a  summary  of 
figures  reported  from  the  association  mills.  These  figures  showed 
the  total  amount  of  orders  on  hand,  the  total  orders  received  during 
the  week,  the  total  shipments  for  the  week,  and  then  by  subtracting 
the  shipments  from  the  orders,  showed  the  balance  of  orders  on  hand. 

The  statement  further  showed,  in  percentages,  whether  and  how 
much  shipments  were  exceeding  production;  orders  exceeding  pro- 
duction ;  orders  exceeding  shipments,  and  whether  there  was  an  in- 
crease in  orders  compared  with  the  last  report.  There  was  also  other 
pertinent  information  tending  to  inform  the  members  how  to  read 
the  barometer. 

In  the  early  barometers,  the  association  took  as  a  base  the  actual 
production  and  compared  the  orders  and  shipments  with  it.  Subse- 
quently, the  orders,  shipments,  and  actual  production  were  compared 
with  an  assumed  normal  production.  This  normal  production  was 
arrived  at  by  taking  the  production  for  a  certain  number  of  months. 

Three  cuts  of  the  barometer  in  its  various  stages  of  development 
are  reproduced  facing  page  60. 

CURTAILMENT  OF  PRODUCTION. 

In  addition  to  the  barometer  there  was  a  continual  correspondence 
carried  on  between  various  members,  stressing  the  idea  of  decreasing 
production  and  the  beneficial  results  that  would  accrue  to  the  mem- 
bers of  the  association  by  such  action.  The  activities  of  the  associa- 


60  LUMBER   MANUFACTURERS '  TRADE  ASSOCIATIONS. 

tion  were  also  supplemented  by  trade  journals  which  gave  out  infor- 
mation such  as  was  portrayed  by  the  barometers  and  through  edi- 
torials urged  the  members  to  regulate  their  production  according  to 
the  barometer. 

Finally,  to  enable  the  membership  more  effectually  to  secure  the 
fruits  of  their  system  of  curtailing  the  production,  representatives  of 
the  leading  concerns  held  frequent  meetings  at  which  market  condi- 
tions, including  the  supply  and  demand  as  reflected  in  the  barometers, 
were  discussed,  and  harmonious  action  on  prices  arrived  at.  At  one 
meeting  in  particular,  as  evidenced  by  correspondence  hereto  at- 
tached, "  the  consensus  of  opinion  on  prices  "  was  "  that  conditions 
justified  an  advance  *  *  *,"  and  that  new  price  lists  would  "  be 
out  the  first  of  next  week  carrying  these  advances." 

As  disclosed  in  the  documents  sent  to  the  committee,  the  plan  is  for 
each  mill  to  regulate  its  current  production  in  accordance  with  the 
current  total  demand,  as  shown  by  the  orders  and  shipments  of  all 
mills,  and  to  cut  down  production  immediately  and  proportionately  to 
any  excess  in  the  total  production  over  total  orders  and  shipments, 
regardless  of  the  position  of  any  individual  mill.  At  one  meeting  the 
members  took  a  rising  vote  unanimously  to  the  effect  that  each  would 
regulate  his  own  individual  production  according  to  the  common 
plan,  and  keep  it  within  the  limits  of  demand  as  shown  by  the  asso- 
ciation statistics.  This  theory  was  explained  and  urged  upon  the 
membership  at  great  length  by  association  leaders  during  1915  and 
1916,  during  which  time  two  pronounced  curtailment  movements 
were  organized  and  carried  out.  The  barometers  were  inaugurated 
and  are  now  used  for  the  purpose  of  securing  the  more  effectual  exe- 
cution of  the  plan. 

For  more  than  a  year  during  the  war,  the  Southern  Pine  Associa- 
tion restricted  the  circulation  of  its  barometers  to  the  membership. 
This  was  for  the  purpose  of  preventing  the  buyers  of  lumber  securing 
market  information  which  would  lead  them  to  reduce  their  purchases 
in  the  expectation  of  lower  prices.  At  the  time  such  action  was 
taken,  the  production  was  exceeding  the  sales.  This  action  was  taken 
over  the  protests  of  association  leaders,  who  had  warned  that  such 
restriction  would  constitute  an  admission  of  manipulation.  As  late 
as  March,  1920,  Mr.  Chas.  S.  Keith,  for  four  years  president  of  the 
Southern  Pine  Association,  referred  to  the  restriction  of  the  barome- 
ters' circulation  as  being  evidence  of  manipulation  under  such  cir- 
cumstances. 

From  time  to  time  since  the  formative  period  of  1915-16  the  asso- 
ciation leaders  have  urged  the  membership  to  regulate  their  produc- 
tion according  to  the  demand  as  indicated  by  the  barometer,  so  that 
prices  could  be  advanced  or  at  least  prevented  from  receding.  A 
striking  instance  of  this  occurred  early  in  1918,  when  the  World 


Southern  Pine  Association 


WEEKLY  REPORT  OF  ORDER  FILE 


New  Orleans,  November  29,   1915 


For  the  Week  Ended  Friday,  November  26.  1915 


151  MILLS  REPORT: 

Orders  on  hand 

Orders  received  during  week 

Tolal 

Shipments  during  sveek 
Balance  Orders  on    hand 


CARS 
22,793 

4,972 


FEET 

451,301,400 
98,445,600 


27,765 
5,614 


549,747,000 
111,157,200 


22,151 


438,589,800 


Average  Orders  per  mill  for  the  week 
Average  Shipments  per  mill  for  the  week 
Average  Production  per  mill  for  I  he  week 

Shipments  exceed  Production  for  the  week 
<  Irders  exceed  Production  for  the  week ... 

Shipments  exceed  Orders  for  the. week 

Decrease  in  Orders  compared  with  last   report . 


651,958  feet 

736.140 

586.086 

22.658.214  feet        25.60% 

9.946.614  11-24% 

12.711.600  1.29*7, 

12.711.600  .26% 


PREVIOUS  REPORTS 
WEEK  MILLS 

ENDED                        REPORTING                 ORDERS  SHIPMENTS  UNFILLED 

Oct.  22                        153                   6792  cars  5575  cars  23.192  cars 

"      29                         147                    5742  5889    "  22.481 

Nov.    5                         145                    5221  5204    "  20.967 

"      12                         148                    5949  5313    "  23.146 

"19                         157                    5803  5599    "  23.928 

26                         151                    4972  5614    "  22.151 

Barometer   indicate*   percentage    of   Order*  and    Shipme  nts  above  or  below 
Production. 


OHOERJ    WMDWTIC*  jniM(KN« 


L 


TRADC    BAROMETER 
Whenever  Shlpm^ntfl  or  Order*  art 


«l»Tlrii'-i-    Indlc-iitr*     tlmt    whra- 


19.800  feet  is  used  as  basis  for  carload,    being   average   sized   car  shipped   in          K&SrtJ^'Al^    iSS^  "pro* 
September.  If   •"«"•«'-  «~  ' '"•"•« 


Southern  Pine  Association 


WEEKLY  REPORT  OF  ORDER  FILE 


No.  24 

New  Orleans,  December  6,   1915 
For  the  Week  Ended  Friday,  December  3,  1915 


153  MILLS  REPORT: 

Orders  on  hand 
Orders  received  during  week 
Total  

Shipments  during  week  

Balance  Orders  on   hand 


CARS  FEET 

22,720    449,856,000 


4,909 


97,198,200 


27,629 
5,661 


547,054,200 
112,087,800 


21,968 


434,966,400 


Average  Orders  per  mill  for  the  week 

Average  Shipments  per  mill  for  the  week. 
Average  Production  per  mill  for  the  week. 


Shipments  exceed  Production  for  the  week 

Orders  exceed  Production  for  the  week 

Shipments  exceed  Orders  for  the  week 

Decrease  in  Orders  compared  with  last  report. 


635.282  feet 
732,600 

586,086     • 

22.416,642  feet  25.00% 

7,527.042  '  -     8.41% 

14,889.600  "  =  15.32% 

.14,889,600  "  =     3.31% 


PREVIOUS  REPORTS 

WEEK  MILLS 

ENDED                          REPORTING                 ORDERS                        SHIPMENTS  UNFILLED 

Oct.   29                          147                    5742  cars                    5889  cars  22.481  cars 

Nov.    5                          145                    5221     "                      5204    ••  20,967    " 

••       12                          148                    5949    "                      5313    "  23.146     " 

"19                          157                    5803    "                      5599    "  23,928     « 

"      26                          151                    4972    "                      5614    "  22,151     " 

Dec.    3                          153                    4909    "                      5681     "  21,968     " 

Barometer  indicates  percentage  of  Orders  and  Shipments  above  or  below 
Production,  which  is  always  shown  as  '  Base,"  or  100%. 

19,800  feet  is  used  as  basis  for  carload,  being  average  sized  car  shipped  in 
October. 


o 


o 


(Subscription   price  of  this  report 


ibers     tH   per    yrar 


TRADE   BAROMETER 

Whenever  Shipment*  or  Orders  are 
Iti-low  Production,  ••xpcrlrlicp  intll 
cmn  an  over  pr.xlucti.in.  with  >  on 
M-qurnt  lowering  of  values. 

KxlM'M.Tice  in, li. -nit's  that  when 
ever  Shipment*  or  Orders  fire  nbov« 
Production,  values  Increase,  pro- 
vided Production  does  nut  Increase 
at  a  greater  ratio  than  ShlpmeDta 
and  Orders. 


Southern  Pine  Association 


WEEKLY  TRADE  BAROMETER 
No.  228 

New  Orleans,  La.,  Nov.  3,  1919. 
For   the  Week    Ended  Friday,  Oct.   31,  1919, 
138  MILLS  REPORT: 

CARS  FEET 

Orders  on  Hand  17,123  377,202,567 

Orders  Received  during  Week  2,299  50,644,671 

TOTAL  19,422  427,847,238 

Shipments  during  Week  2,680  59,037,720 

Balance  Orders  on  Hand  16,742  368,809,518 


F 

OR  THE  WEEK  ( 

Orders  
Shipments  
Production  

Normal  Product!* 

138 

MILLS) 

TOTAL 

..   50.644.671 
.  .    59,037.720 
..    72.867,815 

..   86,839,795 

feet 

ATI  RACK 

rr.tt  MILL 
366,990 
427,810 
528,028 

629,274 

feet 

un  These 

Mills.    . 

Shipments  below  Production  for  the  week  
Orders  below  deduction  for  the  week  

13.830.095  fe 
22,223,144 
8.393,049 

et  =18.9S% 
-30.50% 
-  14.22% 

13  971  980 

-  16.09% 

-32-02% 
-41.68% 

Shipments  below  Normal   Production 

27,802,075 

Orders  below  \ormal  Production 

36,195,124 

Decrease  in  Orders  compared  with  last  report. 


8,393.049 


-  2.23% 


PREVIOUS  REPORTS 


WEEK      MILLS  BE- 

AVF.RACE 
ORDERS 

AVERAGE 
SHIPMENT* 

AVERAGE 
PRODUCTION 

"SKsr 

TOTAL 
UNFILLED 

itrraft  (I«MM 

ENDEF" 

i*MAin\* 

(Fw«l 

(FMt) 

'Feet) 

(Feet) 

1CARS 

(Kert) 

Aug. 

8 

151 

527.251 

497,054 

498,696 

671.702 

24.146 

3,333,027 

15 

163 

439,613 

478,329 

482,717 

631,229 

23.731 

3.247,349 

22 

169 

392,399 

498,942 

497,864 

629.001 

24,576 

3,165,066 

29 

168 

387.428 

509,348 

492,346 

645.786 

24,835 

2,861,605 

Sept. 

5 

162 

399,118 

448,575 

500,474 

659,647 

22,321 

3,161,964 

12 

155 

454.126 

455,626 

510,023 

633,370 

23,783 

2,995,323 

19 

158 

369,915 

445,632 

520.969 

631,065 

21.964 

2,837,44.? 

26 

172 

344,721 

401,622 

496,212 

608,782 

21.209 

2,710,456 

3 

160 

310,993 

428,441 

502.166 

607,603 

22,055 

2,685,583 

10 

145 

339,228 

390,831 

513,336 

617,909 

20.328 

2,634,524 

Oct. 

17 

156 

381,412 

410,220 

475,397 

(105,402 

18,606 

2,627,382 

24 

146 

385,658 

415,684 

488,861 

623,116 

17,831 

2,690,405 

Nov. 

3 

138 

366.990 

427^10 

528,028 

629,274 

16.742 

2,672.533 

22.029  feel  Is  used  as  basis  for  carload  being  average  load  chipped  in  September. 


WEEKLY     BAROMETER 

Barometer  indicates  percentage  ol 
Production,  Orders  and  Shipment* 
above  or  below  Normal  Produc- 
lion,  which  Is  shown  as  "Base,"  or 
100% 


LUMBER  MANUFACTURERS  *   TRADE   ASSOCIATIONS.  61 

War  was  approaching  its  climax.     The  president  of  the  Southern 
Pine  Association,  addressing  the  members,  said : 

When  you  see  production  exceeding  shipments  and  stocks  of  lumber  accumu- 
lating you  should  know  beyond  doubt  the  ultimate  effect  of  such  a  situation  is 
price  recession.  *  *  *  When  conditions  demonstrated  by  the  barometer 
show  production  in  a  dangerous  condition,  we  should  apply  the  remedy  indi- 
vidually, without  consulting  our  neighbors  and  without  discussing  it  with  our 
friends,  trusting  to  their  business  acumen  and  good  sense  to  do  likewise. 

This  appeal  by  the  president  of  the  association  was  published  and 
circulated  in  an  official  association  pamphlet  entitled  "  Pine  and 
Patriotism."  At  this  time  there  was  outstanding  a  public  appeal 
by  the  President  of  the  United  States  for  the  greatest  possible  pro- 
duction as  a  war  measure.. 

There  is  also  evidence  herewith  of  subsequent  efforts  by  association 
leaders  to  keep  the  membership  awake  to  the  importance  of  restrict- 
ing their  individual  production  proportionately  to  any  excess  of  the 
total  production  over  the  total  demand,  as  indicated  by  the  barometer. 
In  a  letter  of  June  26,  1919,  Mr.  Chas.  S.  Keith,  in  discussing  the 
general  distribution  of  the  barometers,  stated  that  when  "  the  public 
might  expect  a  recession  in  values,"  the  manufacturer  "  should 
quickly  see  the  condition  and  apply  the  only  corrective  remedy,'  to 
wit,  instead  of  normal  production  while  the  public  is  buying  less,  the 
manufacturer  should  produce  less  lumber."  Mr.  Keith  stated  that  if 
this  were  done  the  buyers  were  welcome  to  the  information  contained 
in  the  baromejters,  especially  since  the  mills  had  knowledge  of  the 
barometer  information  four  or  five  days  in  advance  of  the  public. 

As  shown  by  the  association  barometers,  the  production  of  south- 
ern pine  has  been  below  "  normal "  ever  since  1916,  and  with  the  ex- 
ception of  six  or  seven  scattered  months  the  orders  placed  during  the 
same  period  have  also  been  below  "  normal."  It  would  seem  to  follow 
that  the  high  prices  obtained  for  southern  pine  lumber  have  not  been 
the  result  of  unusual  demand  as  such,  but  because  the  demand  has 
almost  constantly  exceeded  a  less  than  normal  supply. 

PRICES  AND  PROFITS. 

The  continued  shortage  of  production  as  compared  with  the  de- 
mand has  been  reflected  in  prices  and  profits.  For  the  year  1918,  39 
southern  pine  companies  paid  excess  profits  taxes  averaging  43.5  per 
cent  on  their  combined  sales,  13  of  them  paying  more  than  50  per 
eent  each,  as  reported  by  them  to  an  official  of  their  association. 
These  profits  were  made  while  an  average  price  of  $28  per  thousand 
feet  or  less  was  in  effect,  that  figure  being  the  Government  maximum 
price  during  the  last  six  months  of  1918.  The  excess  profits  taxes 
for  1919,  when  the  average  price  realized  was  $35  per  thousand,  and 


62  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

for  1920,  when  the  average  price  at  times  reached  from  $55  to 
per  thousand,  are  not  available  to  the  Commission. 

CONCERTED  ACTION  ON  PRICES. 

The  documents  show  that  besides  regulating  the  production  to  the 
demand  the  Southern  Pine  Association  has  been  the  medium  for 
direct  and  concerted  action  on  prices,  both  before,  during,  and  since 
the  war.  The  association,  however,  has  been  less  open  in  its  dealing 
with  the  price  question  than  many  of  its  sister  associations.  Several 
of  its  prominent  members  had  been  found  guilty  and  heavily  fined 
by  the  Supreme  Court  of  Missouri  in  1914  for  having  conspired, 
among  other  things,  for  the  purpose  of  curtailing  production  and  fix- 
ing prices  through  the  medium  of  the  old  Yellow  Pine  Manufacturers' 
Association,  as  reported  in  260  Missouri  Reports,  page  212. 

As  a  result  of  this  decision,  the  present  association  was  formed  in 
1915,  and  within  a  few  months  after  its  formation  its  leaders  were 
busily  engaged  in  a  movement  not  only  to  curtail  production  but  to 
advance  prices.  As  the  result  of  a  meeting  on  April  20,  1915,  the 
Southern  Pine  Manufacturers  put  advanced  prices  into  effect  and 
also  began  £o  curtail  production.  In  September,  1916,  Mr.  Chas.  S. 
Keith  invited  four  of  his  principal  competitors,  who  had  control  of 
the  bulk  of  the  stocks  on  hand,  to  raise  their  prices.  This  group  had 
led  in  curtailing  production  and  had  accumulated  heavy  stocks  in  an 
effort  to  hold  the  market.  Mr.  Keith's  invitation  was  accepted. 

In  April,  1917,  the  same  month  war  was  declared,  prices  were  ad- 
vanced at  a  meeting  held  in  Memphis  in  connection  with  a  meeting 
of  the  association  directors,  as  shown  by  correspondence  of  Mr.  Ed- 
ward Hines,  who  was  prominent  in  the  deliberations  of  this  meeting 
and  described  the  advances  made  in  a  telegram  sent  to  his  Minnesota 
mill,  urging  the  Minnesota  manufacturers  to  advance  their  prices 
correspondingly.  In  October,  1917,  conferences  were  held  at  Chicago 
and  Memphis,  as  a  result  of  which  prices  were  advanced,  as  shown  by 
letters,  including  those  of  Mr.  Hines,  who  was  active  in  these  con- 
ferences and  described  the  results  secured. 

In  1918  commercial  orders  were  being  favored  by  the  manufac- 
turers in  preference  to  Government  orders  because  the  commercial 
prices  were  higher.  The  Government,  for  its  own  protection,  fixed 
maximum  prices  on  southern  pine  for  commercial  as  well  as  Govern- 
ment purposes.  The  manufacturers  took  the  position  that  the  Gov- 
ernment maximum  prices  should  be  treated  as  a  minimum,  and  not 
infrequently  exceeded  the  legal  maximum.  On  November  22,  1918, 
following  the  armistice,  the  manufacturers  held  a  national  conference 
in  Chicago.  In  this  the  southern  pine  manufacturers  were  promi- 
nently represented.  The  manufacturers  expressed  themselves  as  a 
unit  to  the  effect  that  the  Government  maximum  price  should  be  ad- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  63 

hered  to  as  a  minimum  basis  until  Government  control  expired  on 
December  23,  1918. 

A  few  days  before  the  expiration  of  Government  price  control, 
a  meeting  of  Southern  Pine  Manufacturers  was  held  at  St.  Louis, 
Mo.,  under  the  auspices  of  the  association's  committee  on  sales  and 
distribution.  As  a  result  of  this  meeting,  documents  evidence  that 
prices  were  radically  advanced  over  the  Government  maximum  and 
that  the  market  was  held  firm  at  the  advanced  figures  in  the  face  of 
a  weak  demand  for  several  months.  Government  requests  through 
the  Industrial  Board  of  the  Department  of  Commerce  for  a  reduc- 
tion of  prices  in  the  spring  of  1919  were  refused  by  resolutions 
adopted  at  New  Orleans,  one  ground  given  for  the  refusal  being  that 
concerted  action  to  reduce  prices  would  be  a  violation  of  the  law. 
Yet  by  their  concerted  refusal,  they  ratified  and  confirmed  their 
concerted  action  of  several  months  previous  in  advancing  prices. 
At  the  New  Orleans  meeting,  Chas.  S.  Keith,  gave  notice  of  his 
right  to  sue  for  triple  damages  under  the  Sherman  Law,  those  manu- 
facturers who  might  join  together  to  accede  to  the  Industrial  Board's 
request  for  a  reduction  in  prices. 

During  the  same  period  the  Southern  Pine  Manufacturers  con- 
ducted a  campaign  to  induce  the  fir  manufacturers  of  the  west  coast 
to  raise  their  prices  so  that  the  advanced  prices  on  southern  pine 
might  be  maintained  and  further  advanced.  The  fir  manufacturers 
concertedly  raised  their  prices  in  April,  1919,  and  the  opportunity 
was  thus  given  for  southern  pine  to  make  further  advances.  This 
was  followed  by  rapid  advances  in  the  price  of  fir  and  all  other 
competitive  woods.  About  this  time  the  "  build  a  home  "  campaign 
brought  the  public  into  the  market,  and  prices  went  through  a  sky- 
rocketing process,  which  put  them,  in  the  words  of  a  prominent  lum- 
berman, in  a  letter  herewith  submitted,  "  far  beyond  anything  the 
present  generation  ever  dreamed  of." 

MARKET    CONDITIONS    SUBSEQUENT    TO     COMMISSION'S 
INVESTIGATION. 

A  review  of  the  conditions  obtaining  in  the  manufacture  and  sale 
of  southern  pine  since  the  close  of  the  Commission's  formal  inves- 
tigation in  June,  1920,  is  of  interest. 

When  the  market  showed  signs  of  weakness  last  June  and  the  re- 
cession from  the  abnormally  high  prices  then  current  began,  the 
mills  generally  curtailed  their  production  as  shown  by  the  associa- 
tion barometers  issued  since  that  time.  That  curtailment  has  con- 
tinued to  the  present.  It  appears  that  the  southern  pine  mills  as 
a  whole  have  lately  been  curtailing  to  the  extent  of  nearly  50  per 
cent  of  their  normal  output,  that  the  downward  price  tendency  has 
already  been  checked  as  the  supply  has  been  brought  below  the  de- 
mand, and  that  prices  have  again  started  upward. 


64  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

While  the  wholesale  prices  of  southern  pine  receded  materially 
from  the  unprecedented  figures  of  last  spring,  the  average  price 
obtained  by  a  representative  manufacturer  during  December,  1920, 
was  about  $7  per  thousand  feet  in  excess  of  the  Government  maxi- 
mum of  $28,  under  which  the  industry  made  large  profits.  Item 
prices  on  substantial  portions  of  the  production  are  still  far  in  ex- 
cess of  those  obtaining  under  the  Government  maximum.  An  in- 
creased demand  would  seem  to  be  all  that  is  lacking  to  bring  about 
much  higher  prices. 

PROPAGANDA  FOR  PRICE  MAINTENANCE. 

As  indicated  by  current  trade  news,  the  Southern  Pine  Manufac- 
turers are  prominent  in  a  campaign  now  being  organized  to  induce 
the  public  to  believe  that  prices  will  not  and  can  not  be  further 
reduced  owing  to  the  cost  of  production  and  that  they  should  not 
further  delay  any  contemplated  building  operations.  In  this  con- 
nection, the  cost  of  production  has  been  enhanced  by  the  continued 
operation  of  the  mills  far  below  their  capacity  and  normal  output. 

This  campaign  is  being  conducted  under  the  auspices  of  the  Na- 
tional Lumber  Manufacturers'  Association,  and  special  assessments 
have  been  and  are  being  voted  by  the  various  affiliated  regional 
associations  to  raise  a  large  fund  for  the  expenses  of  the  campaign. 
The  National  Lumber  Manufacturers'  Association  has  also  requested 
the  retail  lumber  dealers  of  the  country  to  contribute  to  this  fund 
and  to  join  in  this  movement  to  stimulate  buying. 

A  similar  campaign  was  successfully  carried  out  in  1919.  Many 
thousands  of  dollars  were  spent  for  advertising  purposes  and  the 
retail  lumber  dealers  and  leaders  of  public  opinion  in  each  com- 
munity were  enlisted  in  the  "  build  now  "  and  "  own  your  home  " 
movement.  As  a  result,  prices  advanced  so  rapidly  and  radically 
that  in  a  few  months'  time  the  retailers  began  to  criticize  the  manu- 
facturers. A  representative  of  the  manufacturers  reported  the  feel- 
ing of  the  retailers  in  June,  1919,  in  part  as  follows : 

Very  wise  dealers  said  to  me :  "  The  mills  got  us  to  start  these  building  cam- 
paigns, and  they  were  a  great  mistake,  because  as  soon  as  we  got  them  well 
started  the  prices  began  to  jump,  and  we  had  to  raise  our  prices  every  week, 
and  now  our  customers  think  we  got  the  town  lined  up  in  a  building  campaign 
just  so  that  we  could  raise  the  price.  The  townspeople  don't  know  whether  lum- 
ber has  really  gone  up  or  not.  They  simply  know  that  we  lined  them  all  up 
from  school-teachers  and  children  to  the  preachers  in  their  pulpits,  and  then 
lumped  the  prices  on  them." 

GENERAL     PURPOSES      OF     LUMBER     MANUFACTURERS' 
ASSOCIATIONS. 

As  indicated  by  the  documents  sent  to  the  committee  on  January 
10,  it  appears  that  the  manufacturers  of  every  important  kind  of 
lumber  in  the  country  are  organized  into  associations  for  the  purpose 


LUMBER   MANUFACTURERS*   TRADE  ASSOCIATIONS.  65 

of  compiling  and  distributing  information  as  to  each  element  enter- 
ing into  the  supply  and  demand.  This  enables  the  members  to  take 
advantage  of  all  favorable  market  conditions,  either  by  concerted 
action  or  by  harmonious  individual  action.  In  fact,  documents  show 
that  the  more  important  of  these  associations  have  sought  definitely 
to  restrict  the  supply  and  at  the  same  time  to  enlarge  the  demand, 
then  using  such  artificial  conditions  of  supply  and  demand  as  the 
basis  on  which  they  concertedly  act  as  to  prices.  There  are  about  10 
of  these  different  groups  or  associations,  covering  all  the  important 
lumber-producing  regions  of  the  country.  These  regional  bodies  are 
federated  together  in  the  National  Lumber  Manufacturers'  Asso- 
ciation, which  correlates  and  coordinates  the  activities  of  the  whole 
industry  on  matters  of  national  import,  such  as  legislation,  public 
and  governmental  relations. 

Some  of  these  regional  bodies,  such  as  the  West  Coast  Lumbermen's 
Association,  of  Seattle,  Wash.;  the  Western  Pine  Manufacturers' 
Association,  of  Portland,  Oreg. ;  the  Northern  Hemlock  &  Hardwood 
Manufacturers'  Association,  of  Oshkosh,  Wis.,  and  the  Michigan 
Hardwood  Manufacturers'  Association,  of  Cadillac,  Mich.,  are  indi- 
cated by  the  documents  hitherto  sent  you  to  be  agencies  for  open 
price-fixing.  Still  others  are  engaged  in  the  same  kind  of  operations, 
but,  judged  by  the  documents  secured  by  the  Commission,  not  so 
openly.  Some  of  these  organized  groups  have  been  carrying  on 
their  price-fixing  and  curtailment  activities  for  more  than  twenty 
years,  as  evidenced  in  a  report  by  the  Bureau  of  Corporations  in 
1914,  containing  a  complete  history  of  their  concerted  price-fixing 
and  curtailment  of  production  operations.  The  Commission's  pre- 
vious documentary  presentation  evidenced  that  such  practices  were 
not  discontinued  after  the  publication  of  the  Bureau  of  Corporations' 
report.  The  price  activities  of  the  association  first  mentioned  were 
afterwards  so  open  that  a  certain  lumber  trade  journal  in  1915  charac- 
terized them  as  "  a  modern  declaration  of  independence." 


PART  III 

DOUGLAS  FIR  LUMBER  MANUFACTURERS' 
AND  LOGGERS'  ASSOCIATIONS 


67 


LETTER  OF  TRANSMITTAL. 


FEDERAL  TRADE  COMMISSION, 

Washington,  June  P,  19%1. 
To  the  President  of  the  Senate  and  the  Speaker  of  the  House  of 

Representatives : 

Deeming  it  in  the  public  interest  to  exercise  the  authority  con- 
ferred upon  it  by  paragraph  f ,  section  6  of  the  Federal  Trade  Com- 
mission act,  the  Commission  herewith  transmits  to  the  Congress  a 
report  analyzing  the  activities  of  the  trade  associations  composed 
of  Douglas  fir  loggers  and  lumber  manufacturers  of  the  Pacific 
coast,  the  chief  source  of  the  nation's  reserve  lumber  supply.  The 
report  is  also  made  public  under  the  same  authority. 

The  Commission  believes  that  the  facts  herewith  presented  are 
important  to  an  understanding  of  the  status  of  an  industry  which 
is  so  vitally  affected  with  a  public  interest  through  its  relation  to  the 
housing  needs  of  the  Nation  and  its  control  of  a  basic  natural 
resource. 

The  chief  subjects  treated  in  this  report  are  as  follows: 

Price  activities  of  West  Coast  Lumbermen's  Association,  (with 
comparisons  between  present  quoted  prices  and  prewar  quotations). 

Restriction  of  production  under  auspices  of  West  Coast  Lumber- 
men's Association  (with  analysis  of  recent  production  policy). 

Cooperation  between  West  Coast  Lumbermen's  Association  and 
Western  Pine  Manufacturers'  Association. 

Price  and  curtailment  of  production  activities  of  loggers'  asso- 
ciations. 

Relation  between  the  log  and  lumber  markets. 

Manufacturers'  profits  as  affected  by  loggers'  association  activities. 

Long  continuance  of  foregoing  trade  practices. 

Increasing  importance  of  Douglas  fir  region  as  source  of  supply, 

Conditions  in  timber  ownership  of  Douglas  fir  region. 

Relation  of  lumber  manufacturers  to  retail  prices. 

By  order  of  the  Commission. 
Cordially  yours, 

HUSTON  THOMPSON,  Chairman. 
68 


Part  3.— DOUGLAS  FIR  LUMBER  MANUFACTURERS'  AND 
LOGGERS'  ASSOCIATION. 


SUMMARY. 

In  February,  1921,  the  Commission  forwarded  to  the  United  States 
Senate  Committee  on  Housing  and  Reconstruction  an  analysis  of 
conditions  in  the  lumber  industry  as  affected  by  the  activities  of  the 
Southern  Pine  Association  of  New  Orleans,  La.  Shortly  following 
this  the  Department  of  Justice  filed  a  bill  in  equity  seeking  to  enjoin 
the  concerted  control  of  production  and  prices  which  had  been  car- 
ried on  under  the  auspices  of  that  association.  This  action  was  based 
upon  evidence  furnished  by  the  Commission.  The  Commission  now 
deems  it  in  the  public  interest  to  present  a  further  analysis  of  condi- 
tions in  the  production  of  lumber,  primarily  with  regard  to  similar 
activities  of  the  lumber  and  log  producers'  associations  of  the  North 
Pacific  coast,  in  what  is  known  as  the  Douglas  fir  region.  Douglas 
fir  is  now  second  to  southern  pine  in  volume  of  production,  but  is 
destined  in  the  comparatively  near  future  to  become,  and  probably 
to  remain,  the  chief  source  of  the  country's  lumber  supply. 

The  documentary  evidence  upon  which  this  analysis  is  based  was 
procured  from  the  files  of  the  associations  concerned  with  the  pro- 
duction of  Douglas  fir.  Upon  the  basis  of  the  data  there  collected, 
confirmatory  evidence  was  then  sought  and  found  in  the  files  of  their 
prominent  officers  and  members.  The  documents  from  which  quota- 
tions are  given  are  but  a  few  of  thousands  secured  by  the  Commission 
during  its  investigation. 

The  conclusions  which  the  Commission  believes  are  properly  shown 
by  and  deduced  from  this  evidence  may  be  summarized  as  follows : 

First.  Between  1915  and  1920  wholesale  quotations  on  fir  lumber 
increased  from  300  to  500  per  cent,  and  most  items  doubled  in  price 
after  the  armistice.  Notwithstanding  substantial  reductions  since  the 
spring  of  1920,  on  some  items  quotations  still  range  about  as  they 
were  in  May  and  June,  1919,  and  on  others  as  they  were  in  the  spring 
of  1917.  On  substantial  portions  of  the  production  present  quota- 
tions are  still  more  than  double  the  October,  1915,  prices.  Fir  logs 
are  quoted  as  of  May,  1921,  at  prices  identical  with  those  which  were 
fixed  by  the  War  Industries  Board  as  the  wartime  maximum,  and 
which  the  loggers  continued  in  force  as  the  minimum  until  June, 


70  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

1919.  These  comparisons  are  based  upon  the  published  quotations  of 
the  manufacturers  and  loggers. 

Second.  The  loggers  and  lumber  manufacturers  of  the  Douglas  fir 
region  are  organized  for  the  purpose  of  taking  concerted  action  on 
the  prices  of  logs  and  lumber,  supporting  the  prices  so  fixed  by  means 
of  concerted  restriction  of  production.  They  have  been  engaged  in 
such  activities  for  20  years  or  more.  As  production  concentrates  in 
fewer  and  stronger  hands,  the  control  of  these  organizations  over  the 
market  becomes  more  and  more  effective. 

Third.  The  ownership  of  standing  timber  in  the  Douglas  fir 
region,  the  chief  source  of  the  nation's  reserve  supply  of  lumber,  is 
concentrated  in  the  hands  of  a  comparatively  few  strong  concerns. 
The  organized  efforts  of  lumber  producers  to  control  prices  are 
based  upon  their  ability  to  control  production ;  and  control  of  timber 
is  the  key  to  control  of  production. 

Fourth.  The  relation  between  the  fir  log  and  fir  lumber  markets  is 
such  that  ordinary  manufacturing  profits  tend  to  be  absorbed  in 
the  price  of  logs  and  the  valuation  of  timber,  particularly  on  fall- 
ing wholesale  lumber  markets.  The  frequent  and  present  claims  of 
unprofitable  mill  prices  are  largely  explainable  by  the  collusive  ac- 
tion of  loggers  and  timber  owning  mills  in  enhancing  the  value  of 
logs  and  standing  timber. 

Fifth.  The  success  of  the  Douglas  fir  loggers'  and  manufacturers' 
concerted  efforts  to  advance  prices  in  1919  was  threatened  by  the 
importation  of  Canadian  logs,  and  led  to  efforts  to  prevent  such  im- 
portation. Failing  in  this,  the  British  Columbia  loggers  became 
affiliated  with  the  American  association  %and  adopted  the  latter's 
prices. 

Sixth.  In  addition  to  a  similar  exchange  between  fir  and  southern 
pine  manufacturers,  prompt  notice  of  price  action  is  given  each 
other  by  the  fir  manufacturers  and  those  of  western  pine,  for  the 
purpose  and  with  the  effect  of  securing  harmonious  price  action  by 
both  groups.  The  western  pine  manufacturers  have  adopted  without 
change  the  prices  of  the  fir  manufacturers  on  certain  classes  of  lum- 
ber and  use  the  higher  coast  freight  rate  in  quoting  delivered  prices 
on  such  stock. 

Seventh.  The  long  continued  existence  of  artificial  methods  of 
controlling  the  prices  and  production  of  Douglas  fir  was  shown  by 
the  Bureau  of  Corporations  in  1914. 

Eighth.  Despite  the  fact  that  retail  prices  on  lumber  in  January, 
1921,  had  not  been  reduced  proportionately  to  the  decline  in  whole- 
sale prices,  the  manufacturers  joined  hands  with  the  retailers  in  an 
advertising  campaign  to  revive  buying,  which,  if  successful,  will 
tend  to  prevent  such  a  reduction  in  retail  prices. 


LUMBER,  MANUFACTURERS'  TRADE  ASSOCIATIONS.  71 

ORGANIZATIONS  OF  PRODUCERS  IN  DOUGLAS   FIR  REGION. 

The  lumber  manufacturers  of  the  territory  west  of  the  Cascades 
in  Oregon  and  Washington  are  organized  under  the  name  of  West 
Coast  Lumbermen's  Association,  with  headquarters  at  Seattle,  Wash., 
and  a  membership  of  about  200.  This  association  represents  90  per 
cent  of  the  entire  lumber  production  of  the  territory.  There  are  two 
classes  of  lumber  manufacturers  in  the  association.  First  and  most 
influential  are  the  manufacturers  who  own  and  log  their  own  tim- 
ber. Second,  there  are  a  number  of  manufacturers  who  own  no 
timber  but  buy  logs  on  the  open  market  from  a  special  group  of 
timber  owners  who  own  and  log  their  own  timber  but  do  not  manu- 
facture lumber.  These  timber  owners  who  supply  nontimber-owning 
mills  are  known  as  loggers  and  they  also  have  several  association 
organizations,  covering  the  various  logging  districts,  such  as  Puget 
Sound,  Grays  Harbor,  and  Columbia  River.  The  various  districts 
have  a  federated  body  known  as  the  Pacific  Northwest  Loggers  Bu- 
reau. A  prominent  fir  manufacturer  is  on  record  to  the  effect  that 
the  loggers  supply  about  one-third  of  the  lumber  production  of  this 
territory  as  an  independent  business.  In  some  cases,  such  as  the 
Weyerhaeusers,  the  same  interests  not  only  manufacture  lumber  from 
their  own  logs,  but  operate  logging  concerns  which  sell  to  mills 
having  no  timber. 

PRICE  ACTIVITIES  OF  WEST  COAST  LUMBERMEN'S  ASSOCIATION. 

As  the  first  step  in  its  method  of  dealing  with  prices,  this  associa- 
tion compiles  printed  lists,  which  fix  the  relative  values  of  different 
itmes,  the  charges  for  special  sawing  and  dressing.  These  lists  are 
known  as  basic  lists  and  do  not  represent  actual  selling  prices. 

They  are  considered  of  great  importance  by  the  manufacturers, 
however,  in  preserving  uniformity  in  the  relations  between  the  price 
of  different  woods,  grades,  and  sizes.  These  basic  price  lists  have 
been  compiled  by  the  association's  price-list  committee  and  have 
been  copyrighted  in  the  name  of  the  association.  Basic  lists  were 
issued  openly  in  the  name  of  the  association  until  the  fall  of  1919, 
after  the  lumbermen  knew  of  the  Commission's  impending  investi- 
gation. Secretary  Allen,  of  the  association,  then  telegraphed  from 
Washington,  D.  C.,  that  the  legality  of  the  basic  lists  was  doubtful. 

To  complete  the  scheme  of  pricing,  of  which  the  basic  lists  are  the 
first  step,  the  mills  comprising  the  association  jointly  prepare 
standard  discount  sheets,  which,  when  used  in  conjunction  with  the 
standard  basic  price  lists,  give  the  net  selling  prices  for  each  size, 
grade,  and  wood  produced.  The  actual  compilation  of  tljese  dis- 
91321°— 22 6 


72  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

count  sheets  has  been  in  the  hands  of  various  association  committees 
such  as  those  on  values,  market  conditions,  price  lists.  Ordinarily 
the  issuance  of  new  discount  sheets  has  been  immediately  preceded 
by  general  conferences  of  the  manufacturers  called  by  officers  of  the 
association.  At  these  conferences  the  conditions  of  supply  and 
demand,  as  well  as  any  changes  in  the  prices  of  competitive  woods, 
are  considered,  and  decisions  reached  to  make  certain  changes  in 
the  discounts.  The  discount  sheets  themselves  are  published  in  the 
name  of  various  printers,  but  the  information  is  furnished  them  by 
parties  authorized  by  the  conferences  of  the  manufacturers. 

The  next  step  in  the  scheme  is  for  individual  manufacturers  to 
issue  these  discount  sheets  in  their  own  names,  and  frequently  the 
basic  lists  also,  in  this  way  ratifying  and  adopting  the  association 
prices.  The  evidence  of  agreements  to  quote  and  in  many  instances 
to  maintain  the  prices  incorporated  in  the  discount  sheets  is  very 
specific,  and  the  manufacturers  show  in  their  correspondence  .that 
they  look  upon  all  this  activity  as  a  part  of  their  association  work. 
Association  officials  take  the  public  attitude  that  discount  sheets  are 
not  the  work  of  the  association,  but  frequently  take  action  which 
belies  such  attitude.  Secretary  Allen,  of  the  association,  with  the 
knowledge  of  impending  investigation,  in  October,  1919,  telegraphed 
his  office  that  "  it  is  urgently  advisable  that  mills  do  not  issue  con- 
cession sheets  as  a  result  of  any  meeting  or  conference."  Yet  such 
conferences  have  been  the  origin  of  most,  if  not  all,  discount  or  con- 
cession sheets.  Occasionally  such  sheets  have  been  issued  for  the 
primary  purpose  of  establishing  the  previous  one  more  firmly  as 
the  actual  market  price. 

The  prices  promulgated  in  the  basic  lists  and  discount  sheets 
cover  all  the  important  woods  produced  by  the  members  of  the 
association,  including  fir,  hemlock,  spruce,  and  cedar.  The  prices 
on  spruce,  however,  are  largely  the  result  of  conferences  among  the 
spruce  mills,  which  form  a  more  or  less  distinct  group  within  the 
association.  The  association  also  has  a  shingle  branch  which  has 
named  a  standard  price  for  the  red  cedar  shingles  of  the  mills 
affiliated,  and  which  actively  furthered  efforts  to  shut  off  the  supply 
of  a  wholesaler  who  was  inclined  to  "  bear "  the  abnormally  high 
prices  of  December,  1919. 

An  example  of  the  character  of  the  Commission's  evidence  of  the 
prewar  activities  of  the  fir  manufacturers  is  found  in  the  following 
extract  from  a  letter  of  January  23,  1917,  by  F.  A.  Martin  of  the 
H.  H.  Martin  Lumber  Co.  to  L.  J.  Wentworth,  chairman  of  the  mar- 
ket conditions  committee  of  the  West  Coast  Association.  Mr.  Mar- 
tin said; 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  73 

I  am  pleased  to  inform  you  that  we  had  a  meeting  of  the  mills  in  southwestern 
Washington  this  afternoon  and  a  very  representative  meeting.  Every  mill  spoke 
very  favorably  of  conditions  as  they  now  exist  and  a  very  favorable  outlook  for 
the  lumber  business  during  1917.  All  were  unanimously  in  favor  of  supporting 
and  upholding  discount  No.  15  and  a  motion  to  that  effect  was  carried  unani- 
mously. Mills  that  were  not  represented  in  this  district  were  to  be  notified  by 
the  secretary,  Mr.  Wonderly,  of  the  action  of  the  meeting  and  their  cooperation 
asked  in  supporting  discount  No.  15. 

The  discount  sheets  continued  to  appear  at  more  or  less  frequent 
intervals  during  the  war,  but  the  association's  connection  with  them 
during  1917  was  apparently  not  so  open  as  both  before  and  since  the 
war.  When  the  Government  fixed  maximum  prices  in  June,  1918, 
the  association's  connection  with  the  discount  sheets  became  more 
open.  The  Government  maximum  prices  were  arrived  at  by  taking 
as  a  basis  discount  sheet  No.  22,  dated  February  15,  1918,  and  chang- 
ing certain  item  prices.  The  new  prices  were  then  embodied  in  dis- 
count sheet  No.  23  and  issued  under  date  of  June  15,  1918.  Hemlock 
and  red  cedar  were  not  affected  by  the  Government  price  fixing  order 
and  yet  were  included  in  the  discount  sheets  issued  during  the  war 
period.  In  discount  sheet  No.  23  hemlock  and  red  cedar  were  quoted 
at  advances  over  the  prices  shown  in  the  discount  sheet  which  pre- 
ceded it. 

After  the  Government  fixed  the  maximum  limit  of  fir  prices,  the 
association  proceeded  to  treat  the  Government  maximum  prices  as 
the  minimum  at  which  sales  would  be  made,  both  for  Government 
purchases  and  commercial  orders.  The  official  minutes  of  the  regular 
monthly  meeting  of  the  West  Coast  Lumbermen's  Association,  held 
June  28,  1918,  recite  that: 

It  be  the  sense  of  the  meeting  that  the  commercial  market  on  lumber  be  repre- 
sented by  discount  sheet  23,  and  that  the  association  pledge  itself  to  the  Govern- 
ment to  deliver  these  cantonment  orders  on  that  basis  in  record  time. 

Again,  on  September  7,  1918,  the  manager  of  the  Clear  Lake  Lum- 
ber Co.  wrote  J.  P.  McGoldrick,  of  Spokane,  as  follows : 

Regarding  the  meeting  at  Tacoma.  The  meeting  was  very  well  attended,  and 
the  principal  part  of  the  Coast  was  represented.  Everybody  seemed  to  be  very 
much  interested  with  what  the  balance  of  the  manufacturers  are  going  to  do, 
but  they  finally  decided  and  agreed  to  stick  to  discount  No.  23  for  the  next  30 
days. 

They  all  agreed  that  while  there  was  practically  no  business,  cutting  prices 
would  not  bring  any  more. 

Upon  the  expiration  of  Government  control  in  January,  1919, 
the  fir  manufacturers  resumed  their  general  conferences  and  meet- 
ings for  the  preparation  of  discount  sheets.  A  new  sheet  was  issued 
under  date  of  January  25,  1919,  the  day  following  a  meeting  at 
which  it  was  adopted.  Writing  on  January  27,  1919,  to  the  presi- 
dent of  the  company,  a  representative  of  the  E,  K.  Wood  Lumber 


74  LUMBER   MANUFACTURERS '   TRADE   ASSOCIATIONS. 

Co.  of  Bellingham,  Wash.,  described  the  action  taken  at  the  meeting 
on  the  24th  as  follows : 

There  was  a  meeting  of  sales  managers  in  Tacoma  Friday.  While  we  have 
not  received  any  official  notice  of  the  results  of  this  meeting,  we  understand 
that  it  was  agreed  that  No.  25  was  the  market  and  that  all  those  at  the 
meeting  would  hold  for  that  price. 

April,  1919,  was  the  turning  point  in  the  wholesale  lumber  mar- 
kets in  the  transition  from  war  to  postwar  conditions,  after  a  period 
of  several  months,  during  which  buyers  withheld  purchases  in  the 
expectation  of  lower  prices  and  the  manufacturers  stood  firm  on 
the  prices  which  they  had  adopted  subsequent  to  the  armistice. 
The  southern  pine  manufacturers  had  advanced  their  prices  in 
December,  1918,  with  the  result  that  an  unusually  wide  margin 
existed  between  the  price  of  southern  pine  and  fir  in  the  markets  of 
the  Middle  West,  threatening  the  stability  of  the  southern  pine 
market.  The  southern  pine  manufacturers  urged  the  fir  manufac- 
turers to  advance  their  prices,  pointing  out  that  they  were  "  simply 
competing  with  themselves"  and  that  increased  prices  on  fir  could 
be  secured  for  the  asking.  After  a  campaign  of  correspondence  and 
personal  solicitation  had  been  carried  on  for  several  months,  a  meet- 
ing of  the  fir  manufacturers  was  held  under  auspices  of  the  West 
Coast  Lumbermen's  Association  on  April  8,  1919. 

The  results  of  this  meeting  may  be  described  in  the  words  of  R.  P. 
Arkley,  assistant  sales  manager  of  the  St.  Paul  &  Tacoma  Lumber 
Co.,  who  wrote  J.  H.  Austin  of  Kansas  City,  Mo.,  chairman  of  the 
Southern  Pine  Association's  committee  on  sales  and  distribution, 
on  April  10,  stating: 

You  may  be  interested  to  know  that  the  West  Coast  Manufacturers  had  a 
very  enthusiastic  meeting  in  this  city  yesterday  and  that  the  opinion  was 
very  freely  expressed  that  fir  should  demand  considerably  more  money.  It  was 
decided  by  the  West  Coast  Lumbermen's  Association  to  issue  a  new  discount 
sheet  which  will  be  known  as  Discount  Sheet  No.  2,  applying  to  the  new 
Rail  "  B  "  price  list,  which  has  just  recently  been  issued  to  take  the  place 
of  our  May  1st  list.  This  will  advance  the  price  of  Common  Boards  and  2" 
dimension  $1.00,  #2  and  Better  Drop  Siding,  $2.00  6"  No.  2  Flat  Grain  $2.00 
over  discount  Sheet  No.  25  and  will  put  the  mill  base  price  of  Timbers  at 
$20.00.  This  action  we  believe,  will  be  welcomed  by  our  Yellow  Pine  friends. 

The  rapidly  increasing  demand  resulting  from  the  shortage  of 
housing  facilities  and  the  propaganda-encouraged  conviction  of  the 
public  that  prices  would  not  decline,  made  further  increases  pos- 
sible. So  another  meeting  was  held  on  May  1st.  Schwager  &  Net- 
tleton  of  Seattle,  Wash.,  described  the  action  taken  at  this  meeting 
in  a  letter  to  the  John  Schroeder  Lumber  Co.  of  Milwaukee,  Wis., 
dated  May  3,  1919,  stating  in  part : 

In  view  of  the  demand  for  yard  stocks,  at  an  Association  meeting  held  in 
Tacoma,  Wash.,  day  before  yesterday,  prices  on  practically  all  items  were 


LUMBER  MANUFACTURERS7   TRADE  ASSOCIATIONS.  75 

advanced.  We  presume  you  are  familiar  with  Rail  B  list  and  discount  sheet 
No.  2.  At  the  Association  meeting  all  vertical  grain  flooring,  stepping,  5/8 
ceiling  and  corn  cribbing  were  advanced  $2.00  per  thousand.  All  S.  G.  Flooring, 
one-inch  ceiling,  common  boards,  and  small  plank  were  advanced  $1.00  per 
thousand  over  discount  sheet  No.  2.  Timbers  were  advanced  to  a  $25.00  f.  o.  b. 
mill  base  on  12x12.  We  are  inclined  to  believe  that  these  advanced  prices  can 
be  maintained  with  the  exception  of  the  prices  on  the  timbers. 

Prices  were  again  advanced  on  two  separate  occasions  during  May 
and  June  and  so  radically  that  one  of  the  members  of  the  associa- 
tion's committee  on  values  wrote  to  the  chairman  protesting  that  he 
was  "  quite  opposed  to  coming  out  with  so  many  discount  sheets  with 
such  radical  advances,"  that  "  we  believe  concerted  action  of  the  part 
of  the  mills  should  be  dropped  from  now  on,"  and  that  "  the  present 
method  of  issuing  discount  sheets  so  often  attempts  (tends)  to  show 
collusion  on  the  part  of  the  manufacturers  which  I  believe  will  have 
a  bad  influence  on  the  industry." 

Between  July  8  and  July  12,  1919,  a  number  of  the  leading  fir 
manufacturers  issued  discount  sheets  making  uniform  advances  of 
from  $3  to  $10  per  thousand  on  fir  and  as  high  as  $20  per  thousand 
on  cedar  siding.  It  was  probably  to  these  advances  that  H.  S.  Dewey, 
sales  manager  of  the  Edward  Hines  Lumber  Co.,  of  Chicago,  re- 
ferred in  a  night  letter  of  July  14  to  R.  B.  Allen,  secretary  of  the 
West  Coast  Association.  Mr.  Dewey  said : 

More  power  to  your  good  right  arm  recent  price  advances  have  furnished  the 
needed  stimulant  and  the  only  weak  spot  seems  now  to  be  ivitti  your  members 
on  timbers  tell  them  they  cannot  create  a  demand  for  so  much  as  a  single 
carload  by  offering  concessions  buyers  are  now  scared  by  the  weakness  and 
are  waiting  the  rumor  about  accumulation  of  boards  at  southern  mills,  false  as 
the  proverbial  tale  of  the  whale  and  Jonah  on  the  contrary,  nothing  on  hand 
and  prices  have  advanced  three  to  five  dollars  the  past  week.  I  will  be  the 
first  to  tell  you  the  truth  about  any  unfavorable  symptoms  Hemlock  and  Nor- 
way dimension  in  North  are  licked  no  dry  stock  yellow  pine  not  to  be  had — if 
you  have  any  you  can  get  your  price  for  it.  (Italics  inserted.) 

Following  this  fir  prices  continued  to  advance  throughout  the 
remainder  of  the  year  1919  and  during  the  early  months  of  1920  until 
they  ranged  from  $20  to  $50  per  M  feet  above  the  basic  list  of  1919 
which,  of  course,  was  intended  to  be  subject  to  substantial  discounts. 
For  some  reasons,  one  probably  being  their  recognition  that  the  prices 
were  unreasonably  high,  general  conferences  of  the  manufacturers 
to  consider  and  adopt  discount  sheets  were  not  held  after  June,  1919. 
On  the  other  hand  a  number  of  the  leading  manufacturers  and  the 
association's  committee  on  values  continued  to  exchange  views  on 
market  conditions  and  to  act  in  concert  in  the  issuance  of  discount 
sheets.  When  the  still  rising  prices  in  1920  made  necessary  the  prepa- 
ration of  a  new  basic  list  by  the  association  price  list  committee,  the 
discount  sheet  applicable  thereto  was  compiled  and  distributed  by 
the  printers  on  the  basis  of  individual  manufacturers'  discount  sheets. 


76  LUMBER   MANUFACTURERS '   TRADE  ASSOCIATIONS. 

The  printers  admitted  that  they  deliberately  used  prices  higher  than 
the  average  of  such  sheets. 

CURRENT  MARKET  QUOTATIONS. 

The  mill  prices  of  fir  lumber  prevailing  at  the  present  time,  as 
quoted  in  the  current  trade  press, 'show  extreme  variations  between 
the  various  grades  and  classes  of  lumber.  While  all  grades  and 
classes  have  fallen  from  50  to  75  per  cent  from  their  abnormal  heights 
of  the  spring  of  1920,  high-grade  flooring  and  finish  remain  at  about 
the  price  quoted  in  June,  1919.  Flat  grain  flooring  is  quoted  at 
about  the  price  existing  in  April,  1917.  Ceiling  is  quoted  at  about  the 
prices  of  May,  1917;  common  boards  at  the  prices  of  September, 
1916 ;  common  dimensions  at  the  prices  of  April,  1917 ;  fir  plank  and 
small  timbers  at  May,  1917,  prices ;  and  large  timbers  at  the  prices  of 
May,  1919.  The  increases  between  October,  1915,  and  March,  1920, 
were  over  300  per  cent  on  some  items  and  over  500  per  cent  on  others. 
Most  items  doubled  in  price  following  the  armistice.  All  these  items 
except  flat  grain  flooring  and  common  boards  are  still  more  than 
double  the  prices  existing  in  October,  1915.  A  further  exception  is 
ceiling,  which  is  almost  double. 

These  comparisons  will  serve  as  the  basis  for  a  judgment  as  to  how 
far  present  fir  prices  approximate  prewar  values.  With  the  excep- 
tion of  the  May,  1921,  prices  they  are  based  upon  the  official  discount 
sheets  representing  the  prices  agreed  upon  by  the  fir  manufacturers. 

RESTRICTION    OF    PRODUCTION    UNDER    AUSPICES    WEST    COAST 
LUMBERMEN'S  ASSOCIATION. 

The  West  Coast  Lumbermen's  Association  followed  the  example 
of  the  Southern  Pine  Association  in  the  compilation  of  a  weekly 
barometer,  consisting  of  a  pictorial  presentation  of  three  perpen- 
dicular tubes  labeled  production,  orders,  and  shipments.  The  rela- 
tive height  of  the  red  color  in  these  tubes  serves  as  an  automatic  guide 
to  the  production  policy  of  the  mills.  L.  C.  Boyle,  legal  adviser 
of  the  lumber  interests,  expressed  the  opinion  to  Mr.  Chas.  S. 
Keith,  a  leading  southern  pine  operator,  in  1919,  that  the  west  coast 
"  people  are  now  very  largely  converted  to  your  philosophy,"  one 
element  in  which  was  the  emphasis  placed  upon  control  of  produc- 
tion as  distinguished  from  price  agreements.  The  west  coast  asso- 
ciation modeled  its  weekly  barometer  after  that  of  the  Southern  Pine 
Association  and  until  July,  1916,  carried  an  explanatory  note  to  the 
effect  that  the  relation  of  orders  and  shipments  to  the  production 
as  graphically  shown  by  the  barometer  "  will  indicate  over  or  under 
production."  Within  a  few  weeks  following  the  action  of  the  South- 
ern Pine  Association  in  showing  by  the  barometer  the  relation  of 
orders,  shipments,  and  production  not  only  to  each  other  but  to 


LUMBER   MANUFACTURERS '   TRADE  ASSOCIATIONS.  77 

"  normal,"  the  West  Coast  Association  made  a  similar  change.  Since 
January,  1920,  the  West  Coast  Association  has  restricted  the  circu- 
lation of  its  barometer  to  the  members  of  the  association  and  pre- 
vented its  publication,  thus  paralleling  the  action  of  the  Southern 
Pine  Association  in  1917,  which  Mr.  Keith  characterized  as  evidence 
of  manipulation. 

There  was  an  organized  and  apparently  very  successful  curtail- 
ment among  the  fir  manufacturers  in  1916.  This  movement  was  the 
counterpart  of  a  similar  one  in  the  South  and  in  both  sections  a 
minimum  curtailment  of  one  day  per  week  was  aimed  at.  Curtail- 
ment on  this  basis  continued  throughout  the  summer  on  the  Pacific 
coast  and  80  per  cent  of  the  fir  manufacturers  were  reliably  reported 
to  have  joined  in  the  arrangement.  Chas.  E.  Patten,  one  of  the 
committee  in  charge  of  the  curtailment  program,  described  it  in  a 
letter  of  July  31, 1916,  to  J.  P.  McGoldrick,  of  Spokane,  Wash.  Mr. 
Patten  said : 

Our  curtailment  movement  has  been  the  greatest  success  we  have  ever  under- 
taken. A  great  majority  of  the  mills  realizing  that  it  was  absolutely  necessary 
to  keep  the  production  within  the  limit. of  demand  if  we  were  to  get  the  cost 
of  manufacturing  out  of  our  lumber.  Will  say,  that  for  the  past  6  weeks 
very  close  to  80%  of  the  mills  in  Oregon  and  Western  Washington  have  been 
closed.  As  an  illustration;  in  Bellingham  &  Everett  every  mill  was  closed. 
Seattle  every  mill  but  one;  Portland  every  mill  but  one;  Raymond  part  of 
the  time  every  mill  and  part  of  the  time  a  majority ;  in  Southwestern  Wash- 
ington fully  70%  of  their  districts  have  done  about  as  well  with  the  exception 
of  Grays  Harbor,  where  we  have  had  a  great  deal  of  trouble  to  make  them 
realize  that  it  was  necessary  to  curtail;  they  all  admitted  the  necessity,  but 
every  one  wanted  some-one-else  to  make  the  sacrifice,  however,  for  the  last 
two  weeks  practically  every  mill  in  Grays  Harbor  has  been  closed.  A  great 
many  of  us  feel  that  it  is  necessary  to  continue  this  curtailment  until  the  crops 
in  the  Middle  West  are  assured  and  I  am  in  hopes  that  the  curtailment  will 
continue  for  the  next  2  to  4  weeks  or  until  conditions  justify  our  operating  to 
full  capacity. 

During  1917  and  1918  the  association  barometer  shows  that  fir 
production  remained  below  "normal"  for  the  most  part,  but  there 
is  no  direct  evidence  of  concerted  action  to  restrict  production  dur- 
ing the  war.  Strikes  and  disputes  with  labor  were  an  important 
factor  in  reducing  production  below  normal  during  much  of  the 
war  period.  Following  the  armistice,  production  was  generally  re- 
duced among  the  manufacturers  of  Douglas  fir  in  accordance  with 
the  consensus  of  opinion  reached  at  a  national  conference  of  lum- 
ber manufacturers  held  in  Chicago,  on  November  22.  1918.  Follow- 
ing this  conference,  the  assistant  secretary  of  the  West  Coast  As- 
sociation was  engaged  in  collecting  and  reporting  information  to 
the  effect  that  there  would  be  a  complete  close-down  of  the  fir  mills 
and  logging  camps  for  an  indefinite  period  on  account  of  market 
conditions.  Even  under  the  stimulus  of  the  enormous  price  in- 


78  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

creases  of  1919  and  1920,  the  production  of  Douglas  fir  has  seldom 
approached  "normal"  and  for  the  most  part  has  remained  well  be- 
low "normal." 

As  in  the  case  of  southern  pine,  the  West  Coast  Association  barom- 
eter shows  that  the  demand  for  fir  ever  since  1916  has  been  very 
generally  below  "normal."  At  the  same  time  demand  has  been 
rather  consistently  in  excess  of  supply.  Fir  prices  showed  their 
steadily  rising  tendency,  therefore,  not  because  the  demand  was 
abnormally  great  as  such  but  because  the  supply  was  not  equal  to  it. 

When  it  became  apparent  in  June,  1920,  that  orders  at  the  ab- 
normally high  price  levels  then  current  were  not  keeping  pace  with 
the  production,  production  was  curtailed.  Under  the  stimulus  of 
high  prices  during  the  spring  of  1920  and  up  to  June  30,  the  pro- 
duction, as  shown  by  the  association  weekly  barometer,  had  never 
ranged  lower  than  10  per  cent  below  "  normal "  and  several  times 
approximated  "normal."  Beginning  with  the  first  week  of  July, 
however,  production  dropped  to  22  per  cent  below  "normal,"  and 
has  not  exceeded  85  per  cent  of  "  normal "  since  that  time.  With 
declining  wholesale  prices,  production  gradually  decreased  still 
further  during  the  fall  of  1920.  The  month  of  November  showed 
no  week  with  less  than  20  per  cent  below  "  normal,"  and  December 
no  week  with  less  than  30  per  cent  below  "normal."  During  the 
first  three  months  of  1921,  the  weekly  production  has  ranged  from 
41  to  76  per  cent  below  "normal."  Since  the  Commission's  field 
investigation  in  fir  territory  was  completed  in  the  spring  of  1920, 
it  can  not  be  stated  to  what  extent  the  later  greatly  curtailed  pro- 
duction was  the  result  of  concerted  action. 

For  the  period  of  18  weeks  ending  May  7,  1921,  the  association 
barometer  shows  that  fir  production  has  been  kept  considerably  be- 
low orders  and  shipments.  Such  a  condition  is  one  to  which  the 
note  long  appearing  on  the  Southern  Pine  Association  barometer 
would  apply: 

Experience  indicates  that  whenever  Shipments  or  Orders  are  above  Pro- 
duction values  increase,  provided  Production  does  not  increase  at  a  greater 
ratio  than  Shipments  and  Orders. 

COOPERATION   BETWEEN   WEST   COAST   LUMBERMEN'S   ASSOCIA- 
TION AND  WESTERN  PINE  MANUFACTURERS'  ASSOCIATION. 

The  action  taken  by  the  members  of  the  West  Coast  Association  on 
prices  is  promptly  communicated  to  members  of  the  Western  Pine 
Manufacturers'  Association,  representing  the  manufacturers  of  east- 
ern Oregon,  eastern  Washington,  Idaho,  and  Montana,  and  has  fre- 
quently served  as  the  basis  on  which  the  western  pine  manufacturers 
concertedly  advanced  their  prices.  At  times  the  community  of  in- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  79 

terest  and  action  has  been  so  close  that  the  western  pine  manufac- 
turers adopted  the  basic  price  list  and  discount  sheets  of  the  fir  manu- 
facturers for  certain  classes  of  their  own  lumber,  using  also  the 
higher  coast  freight  rates  so  as  not  to  cut  under  the  fir  mills  on  de- 
livered prices.  Thus,  for  example,  on  February  27,  1919,  the  secre- 
tary of  the  Western  Pine  Manufacturers'  Association  issued  a  cir- 
cular to  the  members  as  follows: 

We  find  there  has  been  apparently  some  misunderstanding  over  a  circular  re- 
cently sent  out  on  this  subject.  Our  opinion  is  that  the  mills  in  our  territory  are 
generally  selling  fir  and  larch  dimension  and  timbers  on  the  basis  of  the  West 
Coast  price  list  absolutely,  and  discount  24.  This  meant  exactly  what  it  said ;  in 
other  words,  in  using  the  Coast  list,  members,  I  take  it,  are  using  the  Coast  de- 
livered rate  of  freight.  For  example,  in  selling  a  to  a  52£  rate  point  from  Spo- 
kane, Coast  list  for  55^  rate  should  be  used. 

This  for  your  information. 

An  illustration  of  the  purpose  and  effect  of  the  exchange  of  infor- 
mation between  the  fir  and  western  pine  groups  is  found  in  the  fol- 
lowing correspondence.  On  May  28,  1919,  the  sales  manager  of  the 
St.  Paul  &  Tacoma  Lumber  Co.,  of  Tacoma,  Wash.,  a  leading  fir 
operator,  wrote  the  Craig  Mountain  Lumber  Co.,  of  Craig  Mountain, 
Idaho,  as  follows : 

We  acknowledge  your  letter  of  the  23rd  and  note  that  you  expect  a  meeting  in 
Spokane  on  Saturday.  We  wired  you  today  as  per  copy  enclosed  and  confirmed 
as  we  expect  to  attend  a  meeting  today  of  lumbermen  and  would  be  glad  to  have 
a  report  from  different  market  territories  with  reference  to  conditions. 

The  telegram  referred  to  read : 

Please  wire  immediately  result  of  Spokane  meeting  and  brief  report  market 
situation  Inland  Empire. 

On  the  same  day  the  Craig  Mountain  Lumber  Co.  replied  by  tele- 
gram as  follows: 

Western  pine  advances  one,  two  and  three  common  and  D  Select  two  dol- 
lars, C  select  three  dollars,  B  and  Better  five,  D  siding  fifty  cents,  C  siding 
one  fifty,  B  siding  two  fifty,  Lath  fifty  cents,  battens  one  dollar,  fir  dimension 
and  timbers  five  dollars,  four  boards  two  dollars,  three  boards  four  dollars, 
one  and  two  boards  five  dollars,  selects  three  dollars,  'white  fir  and  cedar 
three  and  better  two  dollars.  Understand  practically  all  mills  sold  out  on 
fir  and  very  low  on  all  items  of  pine  except  three  and  four  boards.  Demand 
good  now  on  number,  three  and  inquiries  heavy  on  four.  Disposition  general 
not  to  book  any  volume  in  advance. 

On  May  31  the  St.  Paul  &  Tacoma  Lumber  Co.  replied  as  follows : 

We  are  very  glad  indeed  to  get  your  wire  outlining  recent  advances  in  your 
market.  This  was  read  to  the  writer  over  the  telephone  at  the  lumbermen's 
meeting  Wednesday  afternoon  and  was  of  considerable  assistance  in  guiding 
the  opinion  of  those  present. 

The  fir  manufacturers  had  adopted  Discount  sheet  5  as  the  result 
of  the  meeting  above  referred  to. 


80  LUMBER   MANUFACTURERS '  TRADE  ASSOCIATIONS. 

PRICE  AND  CURTAILMENT  OF  PRODUCTION  ACTIVITIES  OF  LOG- 
GERS' ASSOCIATIONS. 

During  the  latter  part  of  the  war  period  the  price  activities  of  the 
loggers  were  somewhat  limited  by  the  fixing  of  a  maximum  price 
on  logs  by  the  Government.  When  these  maximum  prices  expired 
in  January,  1919,  the  loggers  continued  them  in  effect  for  several 
months  as  their  minimum  prices,  notwithstanding  a  weakening  fir 
lumber  market.  This  action  was  accompanied  by  a  general  close- 
down of  the  camps  which  began  about  the  middle  of  December, 
1918,  and  was  continued  until  February,  1919.  Writing  on  January 
11,  1919,  to  Chas.  S.  Keith,  a  prominent  southern  pine  manufacturer, 
J.  H.  Bloedel,  a  leading  fir  manufacturer  and  timber  owner,  said: 

The  most  important  items  entering  into  the  cost  of  coast  lumber  is  the  price 
of  logs.  The  loggers  very  generally  have  remained  closed  down  and  at  a 
recent  meeting  determined  to  remain  so  closed  until  February  1st.  This  is 
maintaining  the  present  price  of  logs,  which  is  $12.00,  $16.00  and  $20.00. 

In  March,  1919,  the  loggers  held  a  meeting  at  which  they  decided 
to  "  stand  pat "  on  prices  and  threatened  a  30-day  shut-down  of  the 
camps  if  it  became  necessary  to  reduce  log  prices. 

Writing  on  March  18  to  the  Crossett- Western  Lumber  Co.,  of 
Wauna,  Oreg.,  the  manager  of  the  Weyerhaeuser  Timber  Co.,  of 
Everett,  Wash.,  said : 

Yours  of  March  13th  at  hand  regarding  log  prices.  The  statement  which 
you  make  that  logs  are  being  moved  at  $10.00,  $14.00,  and  $18.00  is  at  variance 
with  published  reports  and  reports  from  the  loggers,  but  we  are  more  inclined 
to  believe  your  statement  than  theirs,  because  undoubtedly  the  loggers  are 
making  a  bold  fight  to  keep  up  the  price. 

All  of  the  large  logging  camps  on  the  Sound  are  selling  at  $12.00,  $16.00 
and  $20.00,  and  there  is  no  large  surplus  of  logs.  In  fact,  I  don't  believe 
there  is  any  surplus,  nor  is  there  a  shortage.  Some  of  the  smaller  operators 
are  offering  logs  at  $1.00  off  the  market.  However,  some  of  the  loggers  have 
been  talking  reducing  prices  and  also  wages,  but  at  a  meeting  held  Saturday, 
the  15th,  they  decided  to  stand  pat  on  both  items  for  the  present. 

We  have  been  looking  for  some  time  for  a  break  to  come  about  April  1st, 
and  the  loggers  say  in  case  it  is  necessary  to  reduce  the  price  of  logs,  they 
will  all  close  down  their  camps  for  thirty  days,  commencing  April  1st,  and 
start  up  May  1st,  at  a  reduced  scale  of  wages. 

We  have  bought  no  logs  at  less  than  $12.00,  $16.00,  and  $20.00,  and  will  not 
make  an  agressive  fight  to  lower  the  price,  but  under- the  present  lumber 
market  it  certainly  seems  that  we  will  have  to  buy  logs  for  less. 

The  Weyerhaeuser  interests  are  important  factors  in  both  logging 
and  milling. 

Early  in  April  the  loggers  met  with  the  manufacturers  and  re- 
affirmed their  adherence  to  the  war-time  maximum  prices.  The 
mills  claimed  that  they  could  not  pay  such  prices  and  make  a  profit 
at  the  existing  market  price  for  lumber.  As  shown  elsewhere,  the 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  81 

mills  concertedly  advanced  the  price  of  lumber  on  April  8  and 
thus  the  pressure  for  lower  log  prices  was  removed. 

Late  in  May  and  early  in  June  the  loggers  of  various  districts  ad- 
vanced the  price  of  logs  in  view  of  the  three  advances  made  by  the 
manufacturers  during  May.  Writing  on  June  7,  1919,  E.  B.  Chinn, 
secretary  of  the  Puget  Sound  Loggers  Information  Bureau,  de- 
scribed the  action  of  the  loggers  as  follows: 

I  regret  that  you  were  not  able  to  be  present  at  last  Saturday's  meeting  at 
which  time  the  price  of  fir  logs  was  discussed.  While  personally  I  favored 
more  of  a  notice  to  the  mills,  the  meeting  which  was  largely  attended,  was 
practically  unanimous  in  a  desire  to  do  as  was  done.  It  is  a  fact  that  word 
was  sent  to  a  meeting  of  mill  men  held  in  Tacoma  several  days  before  our 
meeting  that  there  doubtless  would  be  an  early  change  in  the  price  of  logs 
and  to  make  their  arrangements  accordingly.  As  they  were  discussing  price 
at  that  time  they  probably  are  better  prepared  than  they  are  willing  to  admit 
at  this  time.  Furthermore,  some  of  the  mill  men  have  assured  me  that  this 
raise  has  been  expected  for  some  time.  I  notice  their  new  discount  sheet  No. 
5  states  at  the  very  top :  "  Prices  subject  to  change  without  notice. 

A  development  which  threatened  the  maintenance  of  the  ad- 
vanced prices  above  referred  to  was  an  increased  importation  of 
logs  from  British  Columbia  at  the  former  level  of  prices.  Appeals 
were  made  to  members  of  Congress  and  to  the  United  States  Forest 
Service  to  protect  the  American  loggers  from  this  invasion.  It  was 
suggested  that  the  War  Trade  Board  might  issue  orders  which  would 
shut  out  the  foreign  logs.  Efforts  to  prevent  the  importation  of 
Canadian  logs  proving  unavailing,  affiliation  of  the  British  Columbia 
loggers'  organization  with  those  of  the  American  loggers  was  secured, 
and  in  October,  1919,  representatives  of  the  British  Columbia  dis- 
trict participated  in  a  meeting  of  the  Pacific  Northwest  Loggers' 
Bureau.  A  circular  issued  by  the  Columbia  River  Loggers'  Informa- 
tion Bureau  under  date  of  February  11,  1920,  shows  that  the  price 
of  logs  in  Puget  Sound,  British  Columbia,  Grays  Harbor,  and  Co- 
lumbia River,  as  developed  at  a  meeting  of  the  Pacific  Northwest 
Loggers'  Bureau,  had  been  stabilized  at  the  same  figure. 

The  importance  of  control  of  production  as  a  means  of  main- 
taining the  abnormally  high  prices  obtaining  at  that  time  is  shown 
by  certain  correspondence.  Under  date  of  January  17,  1920,  Joseph 
Irving,  president  of  the  Loggers'  Information  Association,  of  Seattle, 
wrote  the  secretary  in  part  as  follows : 

We  had  a  trustee  meeting  here  this  morning,  and  Mr.  Horton,  Webb,  Williams, 
McCoy,  and  Chisholm  were  present. 

There  is  practically  no  change  of  any  consequence  since  you  left,  but  I  think 
that  Wright  for  the  Weyerhaeusers  is  weakening,  and  with  the  camps  all 
staying  down  until  the  first  of  February  I  don't  think  there  will  be  any 
difficulty  in  putting  in  the  price  of  $17,  $23  and  $28. 


82  LUMBER   MANUFACTURERS*  TRADE  ASSOCIATIONS. 

Further  information  was  sent  to  the  secretary  by  the  association 
under  date  of  January  21,  1920,  as  follows : 

We  are  enclosing  yesterday's  report  which  covers  a  very  small  volume  of 
business.  Have  not  heard  of  anyone  starting  up  excepting  Clear  Lake,  which 
put  five  sides  in  yesterday.  Incidentally,  Moore  sent  out  140  men  Saturday. 
Horton  is  running  one  side  as  he  says  he  has  to  get  5,000,000  out  some  time 
in  May.  He  has  agreed,  hoivever,  to  limit  his  number  of  sides  during  Feb- 
ruary as  the  others  are  to  do.  The  Weyerhaeuser  mills  were  to  start  Monday. 
We  read  yesterday  of  some  other  mill  that  was  putting  on  a  night  shift.  I 
do  not  recall  just  what  mill  it  was.  (Italics  inserted.) 

RELATION  BETWEEN  THE  FIR  LOG  AND  LUMBER  MARKETS. 

The  loggers,  timber-owning  and  nontimber-owning  mills  have  a 
common  interest  in  high  prices  for  lumber  and  it  is  when  prices  are 
rapidly  advancing  that  there  is  the  least  friction  between  them. 
Unless  lumber  prices  are  advancing  the  interests  of  the  loggers  and 
the  nontimber-owning  mills  tend  to  be  diametrically  opposite.  Ex- 
cept under  the  stimulus  of  advancing  lumber  markets,  the  prices 
charged  by  the  loggers  for  logs  tend  to  increase  the  cost  of  production 
of  the  nontimber-owning  mills  to  a  point  where  there  is  little  or  no 
margin  of  profit.  This  is  particularly  pronounced  when  lumber 
prices  fall  and  the  loggers  refuse  to  reduce  the  price  of  logs  propor- 
tionately. There  have  been  a  number  of  instances  when  nontimber- 
owning  mills  were  unable  to  operate  on  the  margin  which  the  loggers 
permitted  to  remain  between  the  cost  of  logs  and  the  selling  price 
of  lumber.  The  conditions  during  the  latter  part  of  1920  form  the 
most  recent  example  of  this  situation. 

On  the  other  hand,  the  timber-owning  mills  may  be  said  to  occupy 
a  strategic  position,  much  superior  to  that  of  their  nontimber-owning 
competitors,  and  also  superior  to  that  of  the  loggers.  Most  of  the 
timber-owning  mills  have  large  supplies  of  standing  timber  or  stump- 
age  secured  at  low  figures  many  years  ago,  since  when  the  value  of 
their  holdings  has  largely  increased.  As  lumber  manufacturers,  they 
are  in  position  to  secure  whatever  profit  there  may  be  in  the  process 
of  manufacture  on  the  same  footing  as  the  nontimber-owning  mills, 
by  buying  logs  and  reserving  their  own  timber  supply.  Or,  if  they 
desire,  they  may  log  their  own  timber  and  realize  on  their  stumpage 
at  a  profitable  figure.  In  either  event,  however,  prosperous  conditions 
in  the  lumber  market  reflect  themselves  in  the  value  of  the  stumpage 
or  standing  timber.  It  is  in  their  desire  and  ability  to  enhance  the 
value  of  their  stumpage  that  the  interests  of  the  loggers  and  the 
timber-owning  mills  coalesce.  Under  the  circumstances  it  is  not  sur- 
prising that  the  timber-owning  mills  look  with  a  friendly  eye  upon 
the  efforts  of  the  loggers  to  advance  or  maintain  the  price  of  logs 
and  that  the  loggers  encourage  and  at  times  almost  dictate  advances 
in  the  price  of  lumber. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  83 

Writing  to  J.  F.  Ives,  of  the  Stimson  Mill  Co.,  under  date  of 
August  4,  1919,  E.  B.  Chinn,  secretary  of  the  Loggers'  Information 
Association,  brought  out  the  common  interest  of  the  loggers  and  tim- 
ber-owning mills  in  stumpage  values.  He  quoted  one  of  the  directors 
of  the  Pacific  Lumber  Inspection  Bureau,  an  organization  of  mills 
dervoted  primarily  to  the  grading  of  lumber,  as  stating  that  "those 
mills  who  did  their  own  logging  were  just  as  vitally  interested  in 
getting  the  highest  possible  price  for  their  stumpage  as  the  independ- 
ent logger.  This  item  of  stumpage  is  the  common  ground  around 
which  we  can  all  gather." 

MANUFACTURERS'  PROFITS  AS  AFFECTED  BY  LOGGERS'  ASSO- 
CIATION ACTIVITIES. 

The  claim  made  that  the  marked  restriction  of  the  fir  output  since 
June,  1920,  has  been  forced  upon  the  mills  by  their  inability  to  oper- 
ate at  a  profit,  should  be  considered  in  connection  with  the  fact  that  a 
radical  curtailment  of  production  was  inaugurated,  as  shown  by  the 
association  barometer,  when  the  market  first  showed  unmistakable 
signs  of  recession  from  the  highest  and  most  profitable  levels  it  had 
ever  known.  It  should  also  be  considered  that  the  loggers  main- 
tained peak  prices  on  logs  for  months  after  wholesale  lumber  prices 
had  shown  substantial  declines,  with  the  result  that  the  nontimber- 
owning  mills  found  their  margin  of  profit  so  small  that  numbers  of 
them  were  probably  unable  to  operate.  This  is  the  chief  basis  for  the 
claim  that  present  prices  are  less  than  the  cost  of  production.  The 
loggers  and  the  timber-owning  mills  are  in  position  to  absorb  all  but 
the  barest  operating  margins  in  the  price  of  their  logs  and  the  value 
of  their  stumpage  and  thus  the  nontimber-owning  mills  can  not  show 
a  profit.  The  cost  accounting  system  of  the  West  Coast  Lumbermen's 
Association  naturally  includes  the  costs  of  a  number  of  mills  which 
pay  the  prices  for  logs  collusively  fixed  by  the  loggers'  associations 
and  supported  by  frequent  shutdowns  of  the  logging  camps. 

In  March,  1919,  when  similar  claims  of  a  loss  to  the  mills  were 
being  made  by  West  Coast  Association  officials,  George  A.  Cooper,  of 
Hazel  Mill  Co.,  Bellingham,  Wash.,  wrote  the  secretary  disputing 
such  claims.  He  said:  . 

I  note  with  much  interest  your  circular  letter  of  the  17th  and  am  inclined  to 
think  there  may  arise  considerable  misunderstanding  from  reading  it.  I  do  not 
think  you  intend  to  say  that  83%  of  the  mills  are  losing  $4.67  on  their  lumber 
output,  or  in  fact  that  they  are  losing  any  sum.  It  is  hardly  conceivable  that 
the  members  of  your  Association  should  cheerfully  lose  money  at  this  rate  for 
the  sake  of  the  dear  public,  and  yet  this  is  what  you  apparently  say. 

The  general  supposition  is  that  the  leaders  of  the  lumber  industry  are  in  the 
main  pretty  frugal  men  and  show  a  degree  of  prosperity  that  would  hardly  war- 
rant the  statement  that  they  are  standing  a  loss  of  one  to  three  thousand  dollars 


84  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

per  day  with  such  apparent  cheerfulness.  Among  my  acquaintances  I  cannot 
recall  one  who  would  consent  to  take  a  loss  of  one  dollar  per  thousand,  let  alone 
four  or  five  times  that  amount. 

The  writer  then  proceeded  to  put  his  finger  upon  the  flaw  in  the 
contention  of  a  loss  to  the  mills : 

The  fact  that  the  logging  end  of  the  industry  shows  about  the  profit  that  you 
claim  loss  for  the  lumber  cutting  end  of  the  industry  is  beginning  to  be  pretty 
well  understood  in  the  East,  as  is  also  the  fact  that  there  is  a  very  large  overrun 
in  the  log  cut  above  the  log  scale.  Taking  these  two  facts  into  consideration,  it 
is  beginning  to  filter  through  the  minds  of  some  people  that  the  mills  operating 
on  their  own  logs  are  keeping  the  price  of  logs  at  the  top  for  a  purpose  and  that 
there  is  a  disposition  in  some  quarters  to  "  camouflage  "  the  situation  so  that 
the  whole  truth  may  not  appear. 

Arguing  that  the  claims  of  a  loss  were  bad  policy  under  the  cir- 
cumstances, Mr.  Cooper  continued : 

It  should  always  be  remembered  that  the  Middle  West  is  ahvays  for  cheap 
lumber,  and  the  fact  that  some  of  the  members  of  your  Association  take  on  large 
orders  for  much  less  than  the  price  on  which  you  base  your  claim  for  a  loss, 
will,  it  appears  to  me,  weaken  your  argument  very  seriously.  These  low  priced 
sales  are  well  known,  and  certainly  will  reach  the  ears  of  government  officials. 
I  have  no  brief  to  criticize  the  judgment  of  the  Association,  but  it  looks  to  me 
that  it  is  not  wise  to  "protest  over  much  "  since  the  evidence  of  actual  sales  at 
so  much  lower  prices  than  are  being  openly  quoted  are  so  easy  to  be  found, 
that  it  might  be  embarrassing,  and  that  any  more  investigating  would  be  seri- 
ously to  the  disadvantage  of  the  whole  industry.  The  thing  that  might  do  some 
good  would  be  an  investigation  of  the  log  trust. 

Again,  A.  L.  Osborn,  a  prominent  manufacturer  of  Wisconsin  hem- 
lock and  hardwoods,  after  returning  from  a  visit  to  the  Pacific  coast 
in  the  summer  of  1918,  reported : 

I  know  that  cost  statements  are  gotten  up  showing  that  lumber  is  hardly 
bringing  a  fair  return  but  from  such  questions  as  I  asked  and  such  information 
as  I  obtained,  I  feel  that  most  operations  are  being  conducted  at  costs  that 
enable  a  realization  of  a  very  fancy  price  for  fir  stumpage. 

The  prices  now  being  quoted  for  the  three  grades  of  fir  logs  as 
reported  in  the  lumber  trade  press  are  $20,  $16,  and  $12,  respectively. 
These  are  the  identical  prices  which  were  fixed  by  the  Government 
as  the  maximum  during  the  war  and  which  were  adhered  to  as  the 
minimum  basis  by  the  loggers  following  the  armistice  and  until  June, 
1919,  when  a  series  of  concerted  and  radical  advances  in  price  began. 
It  is  futile  to  expect  a  permanent  reduction  in  wholesale  fir  lumber 
prices  to  anything  like  a  prewar  basis  in  the  face  of  these  Avar  prices 
for  logs. 

LONG  CONTINUANCE  OF  FOREGOING  PRACTICES. 

The  Bureau  of  Corporations'  report  published  in  1914  showed  a 
long-continued  practice  on  the  part  of  the  West  Coast  Lumbermen's 
Association,  its  predecessor  organizations,  and  •  the  manufacturers 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  85 

composing  them,  of  fixing  prices  by  concerted  action,  including  the 
compilation  and  use  of  uniform  basic  price  lists  and  uniform  dis- 
count sheets.  No  essential  break  in  the  price  activities  of  the  West 
Coast  Lumbermen's  Association  took  place  after  the  publication  of 
the  Bureau  of  Corporations'  report  in  1914.  In  1915  the  association's 
methods  with  regard  to  prices  were-  so  open  as  to  evoke  the  comment 
in  one  of  the  lumber  trade  journals  that  they  constituted  "  a  modern 
declaration  of  independence." 

The  Bureau  of  Corporations'  report  also  showed  that  the  efforts 
of  the  mills  affiliated  with  the  West  Coast  Association  concertedly 
to  control  and  restrict  production  go  back  to  1904.  A  number  of  cur- 
tailment movements  were  organized  between  those  dates,  one  of  which 
in  1911  embodied  a  signed  agreement  to  close  the  mills  one  day  each 
week  for  a  period  of  several  months. 

With  regard  to  the  logging  situation  the  bureau's  report  presented 
evidence  showing  that  for  more  than  ten  years  the  loggers  of  the 
Douglas  fir  region  had  been  fixing  the  price  of  logs  by  concerted 
action  through  their  several  organizations  and  had  frequently  re- 
sorted to  concerted  curtailment  of  production  as  a  means  of  support- 
ing their  actual  or  proposed  action  on  prices.  The  community  of 
interest  between  the  loggers  and  the  timber-owning  mills  was  dis- 
closed and  the  community  of  action  between  their  respective  asso- 
ciations on  price  and  production  policy  was  illustrated  by  docu- 
mentary evidence  published  by  the  bureau. 

The  seriousness  of  the  conditions  involved  in  the  foregoing  is  em- 
phasized when  considered  in  the  light  of  the  increasing  importance 
of  the  fir  region  in  the  nation's  supply  of  lumber,  and  the  basic  condi- 
tions of  timber  ownership  existing  there. 

INCREASING  IMPORTANCE  OF  DOUGLAS  FIR  REGION  AS  SOURCE 

OF  SUPPLY. 

The  chief  source  of  the  country's  supply  of  softwoo'd  lumber  at 
the  present  time  is  the  southern  yellow  pine  region,  comprising  the 
Gulf  and  South  Atlantic  States.  Softwoods  furnish  the  lumber 
which  is  best  fitted  and  most  widely  used  for  ordinary  building  and 
construction  purposes,  forming  80  per  cent  of  the  total  annual  lum- 
ber production.  For  a  number  of  years  the  production  of  southern 
yellow  pine  has  been  decreasing,  having  fallen  from  a  total  of 
16,000,000,000  feet  in  1909  to  less  than  11,000,000,000  in  1918.  Whjle 
some  of  this  decreased  production  is  no  doubt  due  to  natural  condi- 
tions, the  systematic  control  of  production  by  the  mills  affiliated 
with  the  Southern  Pine  Association  has  also  been  a  factor. 

A  recent  survey  covering  5,400  mills  owning  or  controlling  prac- 
tically all  of  the  remaining  virgin  stand  of  southern  yellow  pine 


86  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

timber,  indicates  that  nearly  82  per  cent  of  these  mills  will  have 
cut  out  in  5  years  or  less,  and  that  in  20  years  all  but  12  of 
the  mills  will  have  exhausted  their  present  supplies  of  timber.  In 
10  years  the  southern  pine  region  promises  to  yield  first  place  as  a 
national  source  of  lumber  supply  to  the  Pacific  coast,  just  as  it  in 
turn  had  supplanted  the  Lake  States. 

The  production  of  Douglas  fir  is  now  about  one-fourth  of  the 
country's  entire  output  of  softwoods  and  about  one-sixth  of  the  out- 
put of  all  kinds  of  lumber. 

CONDITIONS   IN  TIMBER   OWNERSHIP   OF   DOUGLAS   FIR   REGION. 

Control  of  reserve  supply  of  stumpage  is  the  key  to  control  of 
the  production  of  lumber  and  to  the  prices  and  profits  involved  in 
its  wholesale  distribution.  It  is  well  to  consider,  therefore,  some 
of  the  basic  conditions  obtaining  in  the  Pacific  Northwest,  the  last 
great  reservoir  of  the  country's  future  lumber  supply.  The  most 
authoritative  and  reliable  study  of  the  timber  resources  of  the  United 
States  was  that  published  in  1913-14  by  the  Bureau  of  Corporations, 
predecessor  of  the  Federal  Trade  Commission. 

More  than  half  of  the  country's  total  supply  of  timber  is  located 
in  the  5  States  of  Oregon,  Washington,  Idaho,  Montana,  and  Cali- 
fornia. More  than  60  per  cent  of  the  timber  in  these  5  States  is 
located  in  the  States  of  Oregon  and  Washington,  and  more  than  80 
per  cent  of  the  timber  in  Oregon  and  Washington  is  located  in  the 
region  comprising  the  western  slopes  of  the  Cascade  Mountains. 
This  last  is  the  territory  covered  by  the  West  Coast  Lumbermen's 
Association  and  the  loggers'  associations  which  form  the  subject 
of  the  report.  In  this  comparatively  restricted  territory  there  were 
some  620,000,000,000  feet  of  privately  owned  standing  timber  of 
various  softwood  species.  The  principal  kind  of  standing  timber 
in  this  district  is  Douglas  fir,  amounting  to  73  per  cent  of  the  total. 
Other  species  in  the  order  of  their  amounts  are  hemlock,  cedar,  and 
spruce,  each  of  which  forms  less  than  10  per  cent  of  the  total  stand. 

This  620,000,000,000  feet  of  standing  timber  is  over  28  per  cent  of 
the  entire  privately  owned  timber  in  the  United  States,  including 
both  softwoods  and  hardwoods.  It  is  more  than  61  per  cent  of  the 
total  privately  owned  timber  in  the  5  States  of  Oregon,  Washington, 
Idaho,  Montana,  and  California. 

The  Bureau  of  Corporations'  study  also  disclosed  a  striking  degree 
of  concentration  in  the  ownership  of  standing  timber  generally,  and 
a  concentration  which  was  particularly  pronounced  in  Oregon  and 
Washington  west  of. the  Cascades. 

In  Oregon  west  of  the  Cascade  Mountains  2  holders  were  found 
to  own  or  control  nearly  24  per  cent  of  all  the  standing  timber;  7 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  87 

holders  nearly  38  per  cent,  13  holders  45  per  cent,  21  holders  51  per 
cent,  45  holders  55  per  cent,  82  holders  63  per  cent,  119  holders  67 
per  cent,  and  184  holders  70  per  cent  of  all  the  timber. 

In  Washington  west  of  the  Cascades  2  holders  were  found  to  own 
or  control  about  35  per  cent  of  the  total  standing  timber ;  5  holders 
44  per  cent,  12  holders  51  per  cent,  31  holders  60  per  cent,  63  holders 
68  per  cent,  107  holders  74  per  cent,  and  183  holders  controlled  79 
per  cent  of  the  total  standing  timber. 

Broadly  speaking,  the  passage  of  time  will  serve  only  to  accentuate 
the  concentration  of  timber  ownership  existing  at  the  time  of  the 
Bureau  of  Corporation's  investigation,  and  the  effectiveness  of  the 
producers'  control  over  the  market  through  their  trade  associations. 
Time  has  already  brought  about  a  high  degree  of  cooperation  be- 
tween the  southern  pine  producers  and  the  fir  manufacturers  on  the 
subjects  of  prices  and  production.  This  cooperation  has  been  and 
will  be  further  strengthened  by  the  fact  that  some  of  the  leading 
manufacturers  of  southern  pine  have  been  investigating  in  fir  stump- 
age  with  a  view  to  transferring  their  operations  to  that  section  when 
their  southern  pine  stumpage  is  exhausted.  Others  have  been  oper- 
ating in  both  sections  for  some  time  past. 

RELATION  OF  LUMBER  MANUFACTURERS  TO  RETAIL  PRICES. 

Lumber  manufacturing  interests  are  an  influential  factor  in  the 
ownership  of  the  retail  lumber  business  of  the  West  and  Middle 
West.  An  unpublished  study  by  the  Bureau  of  Corporations  in 
1914  showed  that  in  the  entire  country  west  of  the  Mississippi  River 
(excluding  Louisiana)  and  including  the  States  of  Wisconsin,  Illi- 
nois, and  Indiana,  more  than  20  per  cent  of  all  retail  lumber  yards 
were  affiliated  with  the  manufacturing  or  wholesale  branch  of  the 
trade.  When  wholesale  prices  advanced  so  steadily  during  the  war 
period  and  so  rapidly  in  1919-20,  the  retailers  were  in  a  position 
to  secure  added  profits  on  their  stocks  on  the  theory  of  replacement 
value.  On  declining  wholesale  markets  the  retailers  are  prone  to 
apply  the  theory  of  actual  cost  rather  than  replacement  value.  As 
in  the  case  of  other  commodities,  many  retailers  of  lumber  did  not 
make  the  same  relative  reduction  in  prices  as  had  taken  place  in  the 
wholesale  market  late  in  1920.  In  the  January,  1921,  conferences 
of  the  manufacturers  at  which  the  present  "  build  now  "  campaign 
was  inaugurated,  their  leaders  "  warned  against  the  possible  danger 
of  antagonizing  the  retail  lumbermen  by  any  effort  to  show  that 
they  have  not  passed  on  to  the  consumer  the  decreased  prices  which 
the  manufacturers  have  put  into  effect,"  and  "  pointed  out  the  grave 
danger  of  antagonizing  the  retailers  by  drawing  any  comparisons 
between  their  present  prices  and  present  wholesale  prices." 
91321°— 22 7 


88  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Following  this  the  lumber  manufacturers  under  the  auspices  of 
the  National  Lumber  Manufacturers'  Association  invited  the  re- 
tailers to  join  hands  in  their  present  "  build  now  "  advertising  cam- 
paign, involving  either  an  active  or  tacit  defense  of  the  existing 
scale  of  retail  prices. 

This  report  is  made  public  under  authority  of  paragraph  (f), 
section  6,  of  the  Federal  Trade  Commission  act,  which  directs  the 
Commission — 

To  make  public  from  time  to  time  such  portions  of  the  information  ob- 
tained by  it  hereunder,  except  trade  secrets  and  names  of  customers,  as  it 
shall  deem  expedient  in  the  public  interest;  and  to  make  annual  and  special 
reports  to  the  Congress  and  to  submit  therewith  recommendations  for  addi- 
tional legislation. 


PART  IV 


WESTERN  PINE  MANUFACTURERS' 
ASSOCIATION 


89 


LETTER  OF  SUBMITTAL. 


FEDERAL  TRADE  COMMISSION, 

Washington,  February  15, 
To  the  President  of  the  Senate  and  the  Speaker  of  the  House  of 

Representatives : 

On  three  occasions  during  the  past  year  the  Federal  Trade  Com- 
mission has  sent  to  Congress,  and  at  the  same  time  made  public,  re- 
ports showing  the  existence  of  practices  in  restraint  of  trade,  on  the 
part  of  various  organized  groups  of  lumber  manufacturers.  The 
most  important  of  these  groups  were  the  Southern  Pine  Association 
of  New  Orleans,  La.,  and  the  West  Coast  Lumbermen's  Association 
of  Seattle,  Wash. 

The  reports  are  the  result  of  an  inquiry  made  at  the  request  of  the 
Department  of  Justice  and  in  each  instance  the  report  and  the  evi- 
dence on  which  it  is  based  has  been  transmitted  to  the  Department  of 
Justice,  as  well  as  to  Congress. 

In  two  of  these  reports  passing  reference  was  made  to  the  activities 
of  the  Western  Pine  Manufacturers'  Association  with  headquarters 
at  Portland,  Oreg.  Since  the  territory  in  which  this  organization 
operates  is  the  nation's  third  largest  producing  section  for  softwood 
or  construction  lumber,  and  the  lumber  there  produced  is  becoming 
an  increasingly  important  factor  in  the  construction  needs  of  the 
country  as  a  whole,  the  Federal  Trade  Commission  having  completed 
its  inquiry  as  to  the  practices  of  this  association  and  their  effect  upon 
competitive  conditions,  acting  under  paragraph  f,  section  6  of  the 
law  creating  it,  now  considers  it  advisable  in  the  public  interest  to 
present  for  the  information  of  Congress  and  the  public  a  special  and 
more  exhaustive  analysis  of  this  association's  activities. 

The  chief  subjects  treated  in  this  report  are  as  follows: 

Origin  and  scope  of  lumber  inquiry  by  Federal  Trade  Commis- 
sion. 

Position  and  influence  of  Western  Pine  Manufacturers'  Associa- 
tion in  the  industry. 

Price  activities  of  Western  Pine  Manufacturers'  Association. 

Price,  costs,  and  margins  of  western  pine  manufacturers. 

Price  activities  of  box  bureau  of  Western  Pine  Manufacturers' 
Association. 

Price  activities  of  Montana  lumber  manufacturers. 
90 


LUMBER   MANUFACTURERS  '   TRADE   ASSOCIATIONS.  91 

Relation  between  association's  price-fixing  activities  and  its  use  of 
common  freight  basing  point. 

Relation  between  association's  price-fixing  activities  and  practice 
of  scant  sawing. 

Relation  between  association's  price-fixing  activities  and  uniform 
discounts  to  and  discriminatory  classification  of  wholesale  trade. 

"  Open  price  "  features  of  Western  Pine  Manufacturers'  Associa- 
tion methods. 

Cooperation  between  Western   Pine   Manufacturers'   Association 
and  West  Coast  Lumbermen's  Association. 

Cooperation  between  Western   Pine   Manufacturers'   Association 
and  California  and  Minnesota  pine  producers. 

Restriction  of  production  under  auspices  Western  Pine  Manufac- 
turers' Association. 

Long  continuance  of  foregoing  activities  by  Western  Pine  Manu- 
facturers' Association. 

By  order  of  the  Commission. 

NELSON  B.  GASKILL,  Chairman. 


Part  4.— WESTERN  PINfi  MANUFACTURERS'  ASSOCIATION. 


SUMMARY. 

Acting  at  the  request  of  the  Department  of  Justice,  the  Federal 
Trade  Commission  in  November,  1919,  commenced  an  inquiry  into 
the  practices  of  various  associations  of  lumber  manufacturers.  More 
than  a  year  ago,  and  as  the  work  progressed  it  has  transmitted  to  the 
Department  of  Justice  the  results  of  its  inquiry  with  the  evidence 
supporting  its  statements.  With  the  consent  of  the  Department  of 
Justice  the  Federal  Trade  Commission  has  also  made  public  reports 
covering  the  same  subject  matter.  This  report  is  one  of  that  series. 

The  present  report  deals  almost  entirely  with  the  methods  and 
purposes  of  the  Western  Pine  Manufacturers'  Association,  and  as 
readily  seen  is  based  upon  documentary  evidence  secured  from  the 
files  of  the  association  and  its  more  prominent  members.  It  should 
be  understood  that  even  this  rather  detailed  presentation  is  far  from 
exhausting  the  documentary  evidence  in  the  Commission's  possession. 

The  ultimate  conclusions  of  fact  which  the  Commission  believes 
are  warranted  by  the  documentary  evidence  secured  and  that  analyzed 
herein  may  be  summarized  as  follows: 

First.  The  lumber  manufacturers  of  Idaho,  western  Montana, 
eastern  Washington,  and  eastern  Oregon  have  organized  and  con- 
ducted the  Western  Pine  Manufacturers'  Association  for  the  primary 
purpose  of  agreeing  on  the  prices  of  their  lumber,  most  of  which 
is  sold  in  the  markets  of  the  Middle  West.  The  activities  of  the 
association  in  advancing  prices  by  concerted  action  were  contem- 
poraneous with  a  steadily  rising  price  level  between  1915  and  1920. 

Second.  Notwithstanding  price  reductions  from  the  peak  of  the 
runway  market  of  1919-20,  ranging  as  high  as  68  per  cent  on  the 
lower  grades,  most  of  the  present  prevailing  quotations  are  far  in 
advance  of  war  time  levels  and  none  touch  prewar  levels.  On  better 
grades  of  Idaho  white  pine  present  quotations  are  substantially 
higher  than  those  prevailing  at  the  peak  of  the  runway  market  in 
February,  1920. 

Third.  The  price  advances  made  by  prominent  members  of  the 
Western  Pine  Manufacturers'  Association  during  the  runaway  market 
of  1919  were  characterized  by  the  more  conservative  members  and 
manufacturers  as  "  radical,"  "  incredible,"  and  "  tremendous."  The 
president  of  the  association  referred  to  them  as  "  anarchistic "  and 
the  secretary  warned  that  they  "  were  inviting  an  effort  to  nationalize 
the  lumber  industry  soon."  The  directing  head  of  one  of  the  most 
92 


LUMBER   MANUFACTURERS*   TRADE  ASSOCIATIONS.  93 

prominent  interests  in  the  association  in  1918  characterized  a  cer- 
tain price  level  as  "  absurd,"  "  exorbitant,"  and  stated  "  it  will  never 
stand  investigation."  Yet  this  level  was  reached  and  passed  in 
1919  and  1920.  When  prices  had  reached  their  peak  in  February, 
1920,  and  demand  was  wavering  an  advertising  campaign  was  pro- 
posed to  stimulate  it. 

Fourth.  In  periods  of  depression  the  association  members  have  re- 
sorted to  concerted  curtailment  of  production  for  the  purpose  of 
maintaining  the  prices  arrived  at  through  concerted  action,  and  as 
a  basis  for  recurring  cycles  of  increased  prices  upon  renewed  demand. 
In  the  fall  of  1921  prices  were  advanced  on  the  basis  of  depleted 
stocks  brought  about  by  a  reduction  of  over  50  per  cent  below  normal 
in  the  1921  output.  Notwithstanding  a  nation-wide  housing  short- 
age, members  estimate  that  their  production  for  1922  will  not  be  over 
50  to  60  per  cent  of  their  1921  production,  and  there  is  trade  talk  of 
another  runaway  market. 

Fifth.  Since  their  organization  in  1905,  the  association  members 
have  given  united  and  uninterrupted  attention  to  the  control  of  prices 
and  production.  The  most  undisguised  efforts  of  that  character  were 
indulged  in  by  this  group  shortly  following  exposure  of  lumber 
manufacturers'  association  methods  by  the  Bureau  of  Corporations 
in  1914.  The  exigencies  of  the  World  War  merely  strengthened  the 
efficiency  of  their  collusion,  and  there  is  reason  to  believe  that  the 
Commission's  investigation  in  1920  has  had  no  deterrent  effect. 

Sixth.  Approximately  80  per  cent  of  the  lumber  output  of  their 
territory  is  in  the  hands  of  members  of  the  Western  Pine  Manufac- 
turers' Association.  Since  the  ownership  of  standing  timber  in  this 
territory  is  in  the  hands  of  a  relatively  few  strong  concerns,  most  of 
which  are  members  of  the  association,  the  power  of  the  association 
over  the  market  for  its  woods  will  almost  inevitably  increase,  unless 
restrained  by  judicial  action. 

Seventh.  The  association  members  have  been  prominent  in  the 
maintenance  of  a  box  bureau  through  which  prices  of  boxes  and  box 
material  have  been  fixed  by  concerted  action.  The  prices  so  fixed  have 
been  a  direct  charge  upon  the  fruit-growing  industry  of  the  so-called 
"  Inland  empire  "  and  mountain  States,  as  well  as  upon  the  meat- 
packing industry  centered  at  Chicago. 

Eighth.  The  members  of  the  Western  Pine  Manufacturers'  As- 
sociation in  Montana  have  a  separate  organization  which  fixes  prices 
within  that  State  and  which  are  followed  by  the  other  districts  of 
the  association.  Outside  the  State  the  prices  of  the  Western  Pine 
Manufacturers'  Association  are  followed  by  the  Montana  manu- 
facturers. 

Ninth.  In  order  to  make  the  uniform  prices  promulgated  by  the 
association  effective,  not  only  at  point  of  shipment,  but  at  destiny- 


94  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

tion,  the  members  have  adopted  a  common  freight  basing  point. 
This  frequently  involves  additions  to  mill  prices  in  the  shape  of  un- 
paid but  arbitrarily  calculated  freight. 

Tenth.  Like  many  otlier  organized  groups  of  lumber  manufac- 
turers, the  members  of  the  Western  Pine  Manufacturers'  Associa- 
tion designate  and  sell  their  lumber  by  dimensions  which  are  larger 
tharLthe  actual  size,  a  practice  known  in  the  trade  as  scant  sawing. 
The  association  has  standardized  the  extent  of  this  discrepancy  in 
an  effort  to  eliminate  what  was  characterized  as  a  form  of  price 
cutting.  It  has  penalized  this  form  of  price  competition  by  the 
imposition  of  a  heavy  price  differential  on  stock  which  exceeds  the 
official  standard  of  thickness  by  as  little  as  one-thirty-second  of  an 
inch. 

Eleventh.  As  an  adjunct  to  maintenance  of  uniform  prices,  the 
Western  Pine  Manufacturers'  Association  has  endeavored  to  stand- 
ardize the  discounts  from  the  official  prices  which  its  members  al- 
low wholesalers  and  to  secure  common  recognition  of  those  concerns 
which  are  entitled  to  such  discounts.  Powerful  retail  concerns  have 
been  given  the  advantage  of  these  wholesalers'  concessions  by  in- 
dividual members  of  the  association. 

Twelfth.  The  association  has  certain  so-called  "  open  prices  "  ac- 
tivities, but  these  have  been  incidental  and  supplemental  to  the  fix- 
ing of  prices  by  agreement. 

Thirteenth.  There  has  been  an  active  cooperation  between  the 
Western  Pine  Manufacturers'  Association  and  the  West  Coast  Lum- 
bermen's Association,  with  the  purpose  and  effect  of  harmonious 
action  on  prices  and  production.  The  action  taken  by  each  group 
is  promptly  communicated  to  the  other  and  the  information  con- 
veyed has  frequently  been  the  basis  of  similar  action  by  the  other. 
On  certain  woods  the  Western  Pine  Manufacturers'  Association 
adopted  not  only  the  price  of  the  west  coast,  but  the  coast  freight 
rate  as  well,  although  several  hundred  miles  nearer  the  consuming 
markets  than  the  coast. 

Fourteenth.  There  has  been  active  cooperation  between  the  West-' 
ern  Pine  Manufacturers'  Association  and  the  producers  of  pine  in 
California,  with  the  purpose  and  effect  of  harmonious  price  action 
on  "  shop  "  lumber,  much  used  in  the  manufacture  of  sash  and  doors. 

NELSON  B.  GASKILL,  Chairman. 
VICTOR  MURDOCK. 
JOHN  F.  NUGENT. 
HUSTON  THOMPSON. 


LUMBER   MANUFACTURERS*   TRADE  ASSOCIATIONS.  95 

ORIGIN   AND   SCOPE   OF   LUMBER   INQUIRY   BY   FEDERAL   TRADE 

COMMISSION. 

As  a  result  of  information  of  which  it  became  possessed,  the  De- 
partment of  Justice  requested  the  Federal  Trade  Commission  to  put 
its  statutory  powers  in  action  for  the  purpose  of  determining  whether 
and  to  what  extent  the  practices  and  usages  of  the  several  associations 
of  lumber  manufacturers  in  the  United  States  were  in  conflict  with 
the  antitrust  laws.  This  meant  in  reality  the  continuation  of  an  in- 
quiry  on  the  same  subject  matter,  conducted  by  the  Bureau  of  Cor- 
porations whose  report  was  published  in  1914. 

Accordingly,  in  November,  1919,  the  Federal  Trade  Commission 
renewed  the  inquiry  and  as  rapidly  as  the  facts  could  be  determined 
with  reference  to  a  particular  association  or  group,  a  report  was  pre- 
pared treating  of  that  association  or  group.  These  reports,  together 
with  the  evidence  collected  during  the  inquiry,  supporting  the  state- 
ments of  the  report,  were  transmitted  to  the  Department  of  Justice. 

The  inquiry  included  about  twelve  principal  associations  or  groups 
of  associations.  Preliminary  reports  upon  the  more  important  asso- 
ciations were  transmitted  to  the  Department  of  Justice  in  June,  1920, 
and  final  reports  have  followed  as  the  inquiry  was  closed  in  various 
stages  and  the  completed  collection  of  evidence  brought  under 
consideration. 

With  the  consent  of  the  Department  of  Justice,  the  disclosures  re- 
sulting from  this  inquiry  have  been  compiled  and  published  by  the 
Federal  Trade  Commission,  in  reports  to  Congress.  The  first  of  these 
published  reports  presents  a  general  survey  of  the  activities  of  the 
more  important  associations  of  lumber  manufacturers  in  their  rela- 
tion to  the  antitrust  legislation.  It  was  issued  in  January,  1921.  The 
second  report  dealt  almost  exclusively  with  the  Southern  Pine  Asso- 
ciation, which  represents  the  most  important  producing  region  of  the 
country.  This  report  appeared  in  February,  1921,  and  was  imme- 
diately followed  by  the  filing  of  an  injunction  suit  against  the  asso- 
ciation by  the  Attorney  General.  The  action  is  still  pending.  A 
third  report  was  issued  in  June,  1921,  dealing  almost  entirely  with 
the  West  Coast  Lumbermen's  Association,  which  represents  the  second 
largest  producing  region  of  the  country. 

The  present  report  shows  the  activities  of  the  Western  Pine  Manu- 
facturers' Association,  which  represents  the  third  largest  producing 
region  of  the  country.  Not  only  do  violations  of  the  antitrust  legis- 
lation appear  in  this  report  as  in  the  preceding  reports  but  an  inter- 
esting development  is  the  relationship  between  these  three  associa- 
tions and  their  close  touch  in  matters  relating  to  markets  and  prices. 

This  report,  as  its  predecessors,  with  the  supporting  evidence,  goes 
to  the  Department  of  Justice  as  well  as  to  Congress. 


96  LUMBER  MANUFACTURERS*   TRADE   ASSOCIATIONS. 

POSITION  AND  INFLUENCE  OF  WESTERN  PINE  MANUFACTURERS' 
ASSOCIATION  IN  THE  INDUSTRY. 

Organization. 

This  association  is  composed  of  the  leading  manufacturers  of  the 
so-called  "  Inland  Empire,"  comprising  eastern  Washington,  east- 
ern Oregon,  Idaho,  and  western  Montana.  They  take  their  name 
from  the  principal  species  produced,  western  yellow  pine,  though 
Idaho  white  pine  is  also  very  important  in  their  output  with  mixed 
woods,  such  as  larch,  white  fir,  and  cedar,  a  substantial  factor.  The 
association  is  a  voluntary  organization,  though  in  1919  its  incorpora- 
tion was  urged  as  a  measure  of  safety  under  the  antitrust  laws. 
About  50  concerns  compose  the  association  and  in  1916  they  con- 
trolled about  80  per  cent  of  the  total  output  of  lumber  in  their 
region.  About  two-thirds  of  the  total  output  of  western  yellow  pine 
comes  from  the  territory  covered  by  the  association.  While  the  total 
output  of  the  region  was  only  about  7  per  cent  of  the  total  softwood 
lumber  output  of  the  country  in  1918,  the  percentage  has 'increased 
since  then  and  with  the  growing  depletion  of  the  southern  pine 
region  as  a  source  of  supply  the  Inland  Empire  will  be  called  on  for 
a  larger  and  larger  part  of  the  nation's  lumber. 

There  are  three  more  or  less  distinct  groups  of  mills  in  the  asso- 
ciation, comprising  what  is  known  as  the  Spokane,  Montana,  and  east- 
ern Qregon  districts.  Each  district  accords  the  others  a  dominant 
voice  in  certain  phases  of  the  association  price  councils.  The  Spokane 
district  is  recognized  as  the  leader  in  regard  to  white  pine,  the  Oregon 
district  in  regard  to  western  pine,  and  the  Montana  district  on  other 
woods,  particularly  as  to  sales  within  the  district.  The  Montana 
manufacturers  have  even  maintained  a  separate  association,  known 
as  the  Montana  Lumber  Manufacturers'  Association,  but  practically 
all  its  members  are  also  members  of  the  Western  Pine  Manufacturers' 
Association,  and  it  has  functioned  largely  as  an  adjunct  of  the  latter. 
While  each  district  group  is  in  a  position  to  control  prices  in  its 
immediate  territory,  and  have  its  decisions  recognized  by  the  others, 
it  is  important  to  note  that  the  bulk  of  the  output  of  the  entire 
region  is  marketed  in  the  Middle  Western  and  Eastern  States.  The 
three  districts  have  united,  therefore,  in  the  exploitation  of  these 
great  consuming  markets. 

Concentration  of  timber  ownership  in  association  territory. 

The  power  of  the  association  over  the  market  is  greatly  strength- 
ened by  the  fact  that  its  members  control  both  the  bulk  of  the  present 
output  in  their  territory  and  the  bulk  of  the  standing  timber,  the 
basic  requirement  for  future  production.  It  is  impossible  to  state 
the  exact  facts  as  to  concentration  in  the  ownership  of  standing  tim- 
ber in  the  territory  covered  by  the  Western  Pine  Manufacturers' 


LUMBER  MANUFACTURERS '   TRADE  ASSOCIATIONS.  97 

Association  at  the  present  time,  but  the  Bureau  of  Corporations' 
report  of  1913,  Part  1,  gave  the  facts  as  they  then  existed,  so  that  the 
present  situation  may  be  approximated.  About  7  per  cent  of  the  total 
privately  owned  standing  timber  in  the  Pacific  Northwest  is  located 
in  Idaho,  Montana,  eastern  Oregon,  and  eastern  Washington.  In 
Idaho  three  holders  controlled  about  46  per  cent  of  the  total  standing 
timber,  6  holders  controlled  58  per  cent,  10  holders  64  per  cent,  and 
19  holders  about  70  per  cent.  In  Montana  6  holders  controlled  nearly 
80  per  cent  of  the  total  privately  owned  standing  timber,  while  5 
holders  controlled  about  50  per  cent  and  12  holders  82  per  cent.  The 
bulk  of  the  association  output  is  concentrated  in  these  two  States. 
With  regard  to  the  western  and  white  pine  of  Washington,  the 
bureau's  report  showed  that  2  holders  controlled  36  per  cent  of  those 
woods  in  that  State,  10  holders  controlled  38  per  cent,  29  holders 
controlled  44  per  cent,  and  63  holders  controlled  about  50  per  cent. 
In  Oregon  2  holders  controlled  27  per  cent  of  the  western  and  white 
pine,  7  controlled  35  per  cent,  16  controlled  40  per  cent,  and  45  con- 
trolled about  50  per  cent. 

There  are  few,  if  any,  producing  regions  of  the  country  where  the 
present  and  future  output  of  lumber  is  in  fewer  hands.  A  compara- 
tively small  number  of  powerful  groups  dominate  the  situation.  The 
most  important  are  the  Weyerhaeuser  interests,  the  Amalgamated 
Copper  Co.,  the  Chicago,  Milwaukee  &  St.  Paul  Railway,  the  Shevlin- 
Carpenter  companies,  and  the  Blackwell-Panhandle,  McGoldrick, 
Ecoles,  and  Brooks-Scanlon  mills. 

Price  activities. 

This  organization  has  dealt  with  prices  in  even  bolder  fashion 
than  the  West  Coast  Lumbermen's  Association.  Some  show  of 
effort  was  made  by  the  latter  organization  to  conceal  its  connection 
with  the  preparation  of  uniform  price  lists  representing  net  selling 
prices.  For  several  years  prior  to  the  Federal  Trade  Commission's 
investigation  the  Western  Pine  Manufacturers'  Association  made 
no  effort  to  conceal  its  responsibility  for  the  preparation  and  cir- 
culation of  such  price  lists.  These  lists  have  been  largely  the  work 
of  the  association's  market  committee  and  frequently  reflected  the 
consensus  of  opinion  reached  at  regularly  called  meetings  of  the 
association.  They  have  been  printed  and  circulated  under  the 
direction  of  the  association's  secretary.  He  also  sends  out  from 
time  to  time  whatever  corrections  and  interpretations  are  found 
necessary,  and  takes  members  to  task  for  cutting  prices. 

These  are  the  chief  differences  between  the  policy  of  the  two  asso- 
ciations referred  to.  Otherwise,  the  scheme  of  pricing  used  by  the 


08  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Western  Pine  Manufacturers'  Association  is  very  similar  to  that  of 
the  West  Coast  Lumbermen's  Association.  The  first  step  is  the 
compilation  of  printed  lists,  which  set  the  association's  opinion  of 
the  relative  values  of  the  different  kinds  of  wood  and  the  different 
classes,  grades,  and  sizes  of  lumber  produced  from  each  wood.  These 
lists  also  show  the  association  charges  for  special  sawing  and  sur- 
facing. They  are  known  in  the  trade  as  basic  lists  and  are  not  in- 
tended to  represent  actual  selling  prices.  These  basic  lists  were 
copyrighted  by  the  Western  Pine  Manufacturers'  Association  in 
1917,  and  contain  the  words,  "  Compiled  and  issued  by  the  Western 
Pine  Manufacturers'  Association."  In  February,  1920,  during  the 
progress  of  the  Commission's  investigation,  the  president  of  the 
association  wrote  the  secretary  favoring  delay  in  the  compilation  of 
a  new  basic  list,  stating  "  it  might  possibly  be  decided  after  the  in- 
vestigation of  the  Federal  Trade  Commission  that  it  is  not  the 
proper  function  of  the  Western  Pine  Association  to  issue  price  lists 
or  to  sell  them."  Nevertheless,  a  new  basic  list  was  issued  by  the 
association  under  date  of  June  1,  1920,  and  another  as  recently  as 
December  1,  1921. 

To  complete  the  scheme  of  pricing  initiated  by  the  promulgation 
of  basic  lists,  the  association  prepares,  prints,  and  circulates  stand- 
ard concession  cards,  quoting  prices  in  terms  of  discounts  from  the 
basic  lists.  Taken  separately,  neither  the  basic  lists  nor  the  conces- 
sion cards  quote  a  net  selling  price;  but  together  they  result  in  the 
quotation  of  a  net  selling  price  on  each  size,  grade,  class,  and  wood 
produced.  The  concession  cards  identify  themselves  in  the  follow- 
ing manner  and  form : 

Prevailing  Concessions  from  Western  Pine  Manufacturers  Association  Price 
List  of  January  1,  1917.  Dated  January  17,  1917 — Discount  #1. 

Both  the  basic  lists  and  concession  cards  are  printed  in  such  a 
way  that  any  individual  manufacturer  may  make  them  his  own 
by  the  simple  expedient  of  stamping  his  name  or  having  the  printer 
insert  it  in  a  space  left  for  that  purpose.  This  is  ordinarily  done, 
and  in  this  way  the  individual  manufacturer  ratifies  and  executes 
the  association's  decisions  as  to  the  prices  which  are  to  be  quoted. 
Other  manufacturers  get  out  their  own  concession  cards,  but  they 
are  usually  mere  duplications  of  the  association  prices.  The  mem- 
bers exchange  concession  cards  and  instructions  to  salesmen,  in  this 
way  notifying  each  other  of  their  adoption  of  the  association  prices. 

The  foregoing  methods  alone,  carried  on  consistently  over  a  period 
of  years,  would  be  strong  evidence  of  agreements  and  understand- 
ings to  do  the  things  which  are  done,  but  there  is  other  evidence 
available.  The  ordinary  business  correspondence  of  the  association 
and  its  members  shows  that  they  regarded  their  price  activities  as 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  99 

involving  a  mutual  understanding  and  a  moral  obligation  to  act  in 
concert. 

Typical  evidence  will  now  be  presented  showing  that  the  above 
statement  is  applicable  to  the  activities  of  the  Western  Pine  Manu- 
facturers' Association,  not  only  before,  but  during,  and  subsequent 
to  our  entry  into  the  World  War. 

Pre-war  price  activities. 

Writing  to  A.  W.  Cooper,  association  secretary,  on  September  24, 
1914,  the  Polleys  Lumber  Co.  of  Missoula,  Mont.,  said: 

After  getting  home  and  going  over  the  situation  carefully  with  Mr.  Lansing 
relative  to  the  White  Pine  proposition  as  outlined  and  agreed  on  at  the  meeting, 
it  seems  that  there  was  not  a  very  definite  understanding  if  any  understanding 
at  all  as  to  the  time  that  this  agreement  would  cover,  although  the  inference 
would  be  that  it  should  cover  a  sufficient  time  until  a  report  on  the  sales  could 
be  made  or  another  meeting  called  for. 

The  writer  went  on  to  discuss  the  accumulation  of  No.  3  stock  and 
stated : 

We  doubt  very  much  if  they  can  maintain  the  price  on  #3  that  we  have 
established,  and  move  it,  and  move  we  must,  situated  as  we  are  with  our  stock 
shed  and  shipping  facilities,  and  for  this  reason  we  are  taking  the  matter 
up  with  you  to  get  an  expression  from  other  mills  regarding  this  grade. 

All  other  grades  we  are  in  position  to  stick  to  as  long  as  anybody  and  are 
going  to  stick  to  this  until  we  have  some  definite  understanding  with  the  Asso- 
ciation, however,  we  feel  certain  it  is  going  to  curtail  our  orders  very  much 
although  we  have  put  it  up  to  all  of  our  representatives  in  the  territory  right 
on  the  square  as  agreed  on  and  have  asked  them  to  make  every  effort  possible 
to  move  the  stock. 

He  referred  again  to  the  meeting  as  follows : 

Personally  I  feel  that  the  meeting  should  result  in  a  lot  of  good,  at  the 
same  time  I  think  the  arrangement  was  very  loosely  carried  out.  In  fact  as 
I  sized  the  situation  up,  I  thought  they  were  trying  to  corner  somebody  in  the 
convention,  and  as  I  had  taken  rather  an  active  part  did  not  want  anyone  to 
feel  that  we  were  backward  in  maintaining  the  standard  price  established. 

In  a  letter  of  September  2,  1915,  to  the  Baker  White  Pine  Lumber 
Co.,  the  association  secretary  said: 

I  am  inclosing  herewith  the  concession  sheet  that  is  now  in  effect.  Prices 
are  going  to  be  made,  I  am  sure,  absolutely  on  the  basis  of  his  sheet. 

On  February  29,  1916,  the  secretary  wrote  J.  P.  McGoldrick,  one 
of  the  leading  association  members,  in  part  as  follows : 

We  expect  to  hold  a  meeting  here  tomorrow  morning  to  prepare  a  concession 
sheet  for  the  new  Price  List.  While  it  is  impossible  to  say  what  advances  will 
be  made,  from  what  I  have  gathered  from  the  Western  Pine  Mills,  believe  they 
will  advance  4"  No.  2  and  4"  No.  3  Common  Western,  also  6"  No.  3  Western. 
The  Craig  Mountain  has  already  issued  a  schedule  advancing  4"  No.  2  and  4" 
No.  3  to  the  8"  price  in  each  grade.  I  think  it  probable  also  that  some  advance 
will  be  made  in  D.  Select  Idaho  Dimension  and  possibly  Idaho  No.  4  Boards. 


100          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Certain  price  advances  made  at  an  association  meeting  in  Decem- 
ber, 1916,  called  forth  criticism  from  David  Eccles,  a  prominent 
Oregon  member  of  the  association.  Writing  to  Secretary  Cooper  on 
January  7,  1917,  Mr.  Eccles  said  in  part : 

Was  very  sorry  that  the  last  price  meeting  that  was  called  in  Portland,  was 
made  on  such  short  notice,  as  I  would  like  to  have  been  in  attendance. 

The  action  taken  at  that  meeting  I  did  not  favor  at  all,  and  my  reason  for  it 
is  that  when  we  discussed  the  matter  of  prices  at  our  conference  in  October  it 
was  understood  that  there  would  be  no  bothering  with  the  prices  of  western  pine 
until  after  the  revision  of  the  grading  rules  for  western  pine  was  passed  upon. 

Secretary  Cooper  replied  to  Mr.  Eccles  on  January  12,  stating  that 
all  the  western  pine  mills  represented  at  the  meeting  "  favored  the 
advance — in  fact,  most  of  them  wanted  a  greater  advance  than  was 
thought  advisable  in  the  wind-up  of  the  meeting." 

Mr.  Cooper  went  on : 

It  seems  to  me  that  two  things  stand  out  distinctly.  One  is  your  local  terri- 
tory that  is  from  Salt  Lake  and  southern  Idaho  territory.  In  that  district  it  is 
recognized  by  everybody  that  the  Oregon  mills  shall  make  any  price  they  see 
fit,  meeting  among  themselves,  and  if  they  will  inform  the  other  mills,  these  mills 
will  respect  that  price.  Outside  of  that  territory  the  price  on  western  pine  as 
any  of  our  other  woods  is  a  matter  that  is  as  much  the  concern  of  one  district 
as  another,  but  those  who  opposed  an  advance  on  western  pine  were  certainly  a 
very  small  minority  of  those  present  at  the  Portland  meeting,  taking  either 
from  the  point  of  view  of  number  or  production  of  western  pine. 

Before  going  to  Portland,  we  also  found  out  that  the  Montana  mills  generally 
were  very  desirous  of  any  advance.  Whether  the  advance  was  wired  or  not  is 
another  matter  but  it  certainly  was  well  thrashed  out  in  Portland  and  as  the 
meeting  was  in  session  all  day  and  discussed  it  from  every  angle,  finally  reach- 
ing the  conclusion  that  it  did,  don't  you  think  it  a  bit  unfair  to  say  the  .white 
pine  people  are  responsible  for  it  or  that  they  dominated  the  thing? 

Price  activities  during  war  period. 

The  entry  of  the  United  States  into  the  World  War  early  in  April, 
1917,  stimulated  the  demand  for  lumber  and  provided  the  association 
members  an  opportunity  to  make  further  price  advances.  A  general 
advance  was  made  on  April  25,  but  some  of  the  mills  issued  special 
price  lists  higher  than  the  association  list.  In  a  letter  of  May  18, 
1917,  Secretary  Cooper  wrote  the  Great  Northern  Lumber  Co.,  of 
Leavenworth,  Wash.,  in  part  as  follows : 

Referring  to  your  letter  of  May  16th,  requesting  two  copies  of  5-A  discount 
sheet  applying  on  January  1st  list. 

Beg  to  advise  that  this  discount  sheet  is  not  official,  No.  5  being  the  last  one 
issued  by  us.  This  sheet  you  have  no  doubt  previously  received.  The  5-A 
card  is  one  which  has  been  issued  by  a  number  of  the  mills  in  this  association 
independently  as  prices  changed  from  the  official  discount  sheet. 

Further  advances  were  made  on  May  15,  1917.  On  May  17,  G.  F. 
Hagenbuch,  of  the  Panhandle  Lumber  Co.,  wrote  F.  W.  Lewis,  of  the 
Blackwell-Panhandle  Sales  Co.,  in  part  as  follows : 


LUMBER  MANUFACTURERS'  TRADE  ^s^oeriTiaNS,          101 


I  received  copies  of  the  telegram  sent  the  salesmen  in  regard  to  the  advance 
in  price,  decided  upon  at  the  meeting  last  Tuesday.  As  I  remember  it,  in  the 
talk  we  had,  there  was  nothing  said  about  dimension  or  Fir  &  Tamarack,  other 
than  it  was  all  to  be  $2.00  advance,  straight  through  on  everything.  When  was 
this  change  made? 

Writing  to  Secretary  Cooper  on  August  22,  1917,  the  Oregon  Lum- 
ber Co.  said  in  part  : 

Will  advise  you  that  prior  to  the  Portland  meeting  we  were  quoting  and 
receiving  a  few  orders  on  the  basis  of  $30.00,  $35.00  and  $45.00  f.  o.  b.  a  52  cent 
rate,  and  we  firmly  believe  that  these  prices  are  plenty  high  enough.  How- 
ever, at  that  meeting  such  interests  as  Shevlin-Hixon  and  Boise  Payette,  who 
have  more  stock  on  hand  than  we  have  thought  they  could  get  $32.50,  $37.50  and 
$47.50  on  a  52-cent  rate,  and  as  our  salesmen  were  at  that  meeting,  writer 
instructed  them  to  use  these  new  prices. 

When  prices  were  again  advanced  in  September,  1917,  the  McGold- 
rick  Lumber  Co.  of  Spokane  sent  all  members  of  the  association  copies 
of  its  telegram  to  salesmen  advancing  prices  and  asked  for  informa- 
tion as  to  other  members'  prices.  A  large  number  of  the  members 
replied  to  the  effect  that  they  had  made  similar  advances,  and  one 
of  them,  the  Eureka  Lumber  Co.,  said  : 

Replying  to  your  inquiry  of  the  13th,  addressed  to  our  Mr.  Weil,  would  say 
that  he  was  in  attendance  at  the  meeting  at  Spokane  and  concurred  in  the  adop- 
tion of  the  new  discounts  of  September  12th. 

Early  in  January,  1918,  prices  were  again  advanced.  Writing  on 
January  10,  1918,  to  T.  A.  McCann  of  the  Shevlin  interests,  W.  C. 
Geddes  of  the  Oregon  Lumber  Co.  said  in  part  : 

Your  letter  of  the  7th  received  and  will  state  that  we  were  advised  of  the  ad- 
vance made  at  the  recent  meeting  held  at  Spokane  *  *  * 

We  also  gleaned  from  his  telegram  that  the  meeting  was  largely  to  decide  on 
a  new  price  list  which  was  to  be  gotten  out.  We  have  not  received  any  advice 
as  to  whether  this  part  of  the  work  was  carried  through.  The  only  advice  we 
have  had  is  that  they  decided  to  put  in  an  advance  on  Western  Pine. 

Mr.  Geddes  further  expressed  the  opinion  that  the  advance  was 
premature  and  inopportune  and  that  "  the  annual  meeting  would  have 
been  the  proper  place  to  have  discussed  the  matter  of  raising  prices." 

On  June  15,  1918,  the  Government  was  forced,  for  its  own  protec- 
tion in  the  purchase  of  lumber  for  military  purposes,  to  fix  maximum 
prices  on  the  two  chief  species  of  softwood  lumber,  southern  yellow 
pine  and  Douglas  fir.  The  Government's  action,  however,  did  not 
extend  to  western  and  Idaho  white  pine,  the  chief  woods  produced 
by  members  of  the  Western  Pine  Manufacturers'  Association. 

On  June  12,  1918,  Secretary  Cooper  wrote  F.  W.  Lewis,  of  the 
Blackwell-Panhandle  sales  office,  in  part  as  follows: 

At  a  meeting  here  yesterday,  as  you  will  no  doubt  notice  from  the  new  dis- 
count sheet,  the  Oregon  mills  adopted  the  same  basis  as  Spokane  for  the  ter- 
ritory west  of  Chicago.  They  plan  to  sell  on  the  5-cent  advance  in  rate  in 
that  territory  at  once. 


102          j^fj-MBE/i  MANUFACTURERS'  TRADE  ASSOCIATIONS. 


On  June  17,  G.  F.  Hagenbuch,  of  the  Panhandle  Lumber  Co., 
wrote  R.  M.  Hart,  general  manager  of  that  company,  as  follows: 

Your  letter  of  the  14th  inst.  received  upon  my  return  to  the  office  after  a 
trip  to  Montana  to  attend  Montana  and  Western  Pine  Assn.  Friday  night  and 
Saturday.  Had  a  very  satisfactory  meeting,  and  all  agreed  with  practically 
what  the  Spokane  district  and  Eastern  Oregon  district  have  done  in  the  way  of 
price  raising. 

The  maximum  prices  fixed  by  the  Government  on  southern  pine 
and  Douglas  fir  on  June  15,  1918,  largely  prevented  further  advances 
in  those  woods.  The  Western  Pine  Manufacturers'  Association,  not 
being  handicapped  by  similar  regulations,  continued  to  function  as 
a  price-  raising  body.  On  July  23  F.  C.  Becker,  secretary  of  the 
Montana  Lumber  Manufacturers'  Association,  wrote  H.  G.  Miller, 
one  of  his  members,  in  part  as  follows  : 

I  just  had  a  long  distance  from  Frank  Lewis,  Spokane,  saying  that  their  new 
price  list  is  ready  and  altho  phone  was  not'  working  well  I  think  I  understood 
him  to  say  that  they  were  not  going  to  send  it  out  until  after  Saturday  the  27th 
and  are  going  to  have  a  market  committee  meeting  Saturday  morning  in  the 
Hutton  Building,  and  would  like  awfully  well  to  have  the  sales-managers  there 
to  discuss  the  whole  proposition,  and  they  do  really  want  some  of  the  Mon- 
tana mills  represented,  and  he  said  that  for  certain  reasons  it  is  essential  for 
as  many  as  possible  to  be  there. 

Writing  to  Mr.  Becker  on  July  30,  A.  G.  Naundorf,  one  of  his 
members,  said  in  part  : 

As  stated  to  you  in  my  wire  of  last  week,  I  attended  the  meeting  in  Spokane 
last  Saturday  and  secured  the  necessary  advance  to  place  the  new  Spokane 
discounts,  applying  to  their  new  list,  in  line  with  Coast  Discount  No.  23  as 
far  as  Larch  and  Fir  is  concerned. 

On  August  7,  Mr.  George  Stoddard,  of  the  Grande  Konde  Lumber 
Co.,  wrote  R.  E.  Irwin,  of  the  Boise-Payette  Lumber  Co.,  as  follows: 

What  do  you  hear  regarding  the  shop1  market?  Since  putting  into  effect  the 
prices  agreed  on  at  the  Baker  meeting,  a  few  weeks  ago,  we  haven't  seen  a 
single  sale  in  the  Bureau  reports  at  these  prices.  In  fact,  all  sales  up  to  date 
have  been  reported  at  the  old  prices,  plus  the  additional  for  advanced  freight. 
Our  mills  have  quite  a  little  shop  on  hand  and  we  do  not  intend  to  hold  out 
for  the  new  prices  when  everybody  else  is  selling  under  us. 

In  replying  on  August  9,  Mr.  Irwin  argued  against  price  cutting 
and  said: 

We  believe  it  is  and  will  be  poor  policy  to  cut  the  price  of  shop  now,  as  it 
will  simply  mean  a  repetition  of  what  was  done  last  year  —  cut  our  price,  sell 
our  stock  and  then  have  the  sash  and  door  people  give  us  the  laugh  on  this  propo- 
sition. 

There  is  to  be  a  semi-annual  meeting  of  the  Association  on  the  14th  at 
Missoula  and  we  think  it  would  be  a  good  idea  to  have  this  matter  threshed 
out  there  and  find  out  what  the  real  market  is  on  shop.  After  that  time,  we 

»  For  explanation  of  term  "  shop  "  see  p.  137. 


LUMBER   MANUFACTURERS '    TRADE   ASSOCIATIONS.  103 

will  have  a  better  idea  of  what  the  value  of  prices  is  and,  if  I  were  you, 
would  not  make  any  changes  in  shop  prices  until  I  had  gone  over  this  matter 
with  the  manufacturers  at  the  Missoula  meeting.  This  is  only  the  writer's 
personal  opinion,  but  it  does  seem  a  shame  to  sell  shop  below  the  figures  that 
the  manufacturers  represented  at  the  Baker  meeting  felt  were  the  market  of 
this  stock. 

Mr.  Stoddard  thereupon  wrote  that  he  would  not  take  any  action 
until  after  the  meeting. 

The  attitude  of  a  prominent  member  of  the  Western  Pine  Manu- 
facturers' Association  toward  price  cutting  by  a  member  of  the  Mon- 
tana association  and  the  methods  used  in  arriving  at  association  prices 
are  shown  by  the  following  extract  from  a  letter  of  September  9, 
1918,  written  by  F.  W.  Lewis,  of  the  Blackwell-Panhandle  sales  office, 
to  Secretary  Becker,  of  the  Montana  association : 

If  the  Eureka  Lumber  Company  is  cutting  the  prices  in  South  Dakota 
through  our  old  friend  Gay  nor  Lumber  Company,  we  certainly  do  not  like  it. 
I  feel  that  the  Spokane  District  as  a  whole  has  done  everything  possible  to 
further  the  interest  of  the  Montana  mills  and  we  feel  that  the  Eureka  Lumber 
Company  should  be  in  line  with  everybody  else.  Only  recently  at  a  meeting  in 
Spokane  we  advanced  our  prices  on  certain  items,  because  the  Eureka  Lumber 
Co.'s  man  was  here  and  said  that  it  would  please  his  concern  very  much,  as 
well  as  the  other  Montana  mills  if  we  did  so. 

A  salesman  of  the  Milwaukee  Land  Co.  had  complained  to  his 
house  about  the  Eureka  Lumber  Co.  cutting  prices.  Writing  on 
September  2,  he  had  said  in  part : 

Will  you  kindly  look  into  the  matter  and  ascertain  if  the  Eureka  Lumber 
Company,  Eureka,  Montana,  are  not  members  of  the  Association  and  supposed 
to  adhere  to  our  prices  down  this  way. 

A  circular  issued  to  his  members  by  Secretary  Becker  on  Septem- 
ber 16  contains  the  following : 

At  the  request  of  our  President,  your  Secretary  attended  the  meeting  of 
operators  and  sale  managers  of  the  Inland  Empire  held  in  Spokane  on  Septem- 
ber 13th,  and  all  except  three  of  the  Inland  Empire  mills  were  represented, 
and  from  Montana,  The  Polleys  Lumber  Company  was  represented  by  Mr. 
J.  P.  Lansing,  and  of  course  your  secretary. 

The  paramount  issue  was  Market  Conditions  and  almost  the  entire  day  was 
spent  on  that  subject  and  at  the  conclusion  everyone  expressed  his  intention 
that  regardless  of  the  Coast  Discounts  they  would  maintain  their  present  con- 
cessions. 

In  the  fall  of  1918  demand  for  lumber  slackened  and  the  main- 
tenance of  the  then  existing  market,  rather  than  further  advances, 
became  the  aim  of  the  manufacturers. 

On  October  23  J.  P.  McGoldrick  of  Spokane  wrote  Secretary 
Becker  of  the  Montana  association  as  follows: 

I   acknowledge  your  letter  of  October  4th  regarding  concessions  in  prices. 
If  you  could  run  across  some  antiquated  reader  of  history,  he  will  probably 
91321°— 22 8 


104  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

inform  you  that  a  mouse  caused  the  overflow  at  one  time  at  Amsterdam,  and 
in  these  modern  commercial  times  small  variations  may  cause  the  overthrow  of 
our  present  satisfactory  price  situation.  You  realize  that  we  are  at  a  crisis. 
The  writer,  with  whom  these  infractions  are  taken  up  in  this  district,  desires 
to  avoid  any.  personality  in  this  matter  as  much  as  possible  and  feels  that 
it  is  up  to  your  office  to  check  these  variations  and  exercise  good  judgment  by 
calling  attention  to  them. 

On  November  4  the  association  secretary,  Mr.  Cooper,  issued  a 
circular  pleading  for  price  maintenance  and  stating : 

In  this  committee  while  reviewing  the  application  of  the  list  it  may  be 
well  to  emphasize  the  vital  necessity  of  not  allowing  our  market  to  be  broken. 
There  is  a  slackness  in  demand  due  to  our  lack  of  adjustment  and  the  various 
restrictions  recently  placed  on  our  business,  and  to  conditions  in  the  industrial 
centers  of  the  East,  as  well  as  to  the  season  of  the  year.  Any  concession  in 
price  is  not  going  to  enlarge  our  market  at  this  time  or  move  any  additional 
stock,  while  there  are  many  reasons  why  any  break  in  the  market  will  re-act 
to  our  disadvantage  in  other  ways  than  financial,  and  in  view  of  the  high 
cost  of  manufacturing  it  would  seem  most  unwise  to  attempt  to  move  stock 
in  this  way.  In  spite  of  rumors  to  the  contrary,  our  observance  leads  us  to 
believe  that  the  market  is  being  generally  well  maintained  and  we  would 
urge  upon  all  manufacturers  the  great  wisdom  of  steadfastly  maintaining 
this  policy. 

Post-war  price  activities. 

Two  days  following  the  armistice,  namely,  November  13,  1918, 
R.  E.  Irwin,  of  the  Boise-Payette  Lumber  Co.,  wrote  W.  C.  Geddes 
of  the  Oregon  Lumber  Co.  urging  the  importance  of  the  earliest 
possible  meeting,  and  stating,  "  we  surely  should  maintain  the  pres- 
ent prices  on  lumber  if  we  are  to  make  any  money — and  that  is 
what  we  are  in  business  for."  A  general  meeting  of  the  association 
was  held  on  November  21st.  The  official  minutes  state  that  the 
general  opinion  was  that  "  nothing  warranted  the  forcing  of  the 
situation  by  price  cutting."  On  November  25  Secretary  Cooper 
issued  a  bulletin  which  contained  the  following: 

1.  Discount  card  2  is  being  well  maintained,  and  it  seems  to  be  the  con- 
census of  opinion  that  it  should  remain  so  as  anybody  well  informed  on  the 
market  with  whom  we  have  talked  believes  no  benefit  is  to  be  derived  from 
weakening  in  price  at  this  time. 

An  effort  was  made  to  make  it  appear  that  price  maintenance  had 
governmental  sanction.  The  secretary  sent  out  a  circular  under 
date  of  December  18,  1918,  in  which  it  was  stated  that  "  eve^body 
there  (in  Washington)  is  warning  producers  in  all  lines  against 
price  cutting  at  this  time,"  and  that  "  any  weakening  in  the  price 
situation  is  bound  to  scare  off  buying."  He  went  on  to  say : 

It  is  with  this  in  mind  that  the  Government  attitude  has  developed.  There 
is  every  indication  that  the  manufacturers  of  this  territory  have  been  pretty 
well  guided  by  the  principles  set  forth  herein,  despite  what  may  appear  to 
be  occasional  lapses  on  specific  sales.  I  think  in  view  of  this  almost  official 


LUMBER  MANUFACTURERS '   TRADE  ASSOCIATIONS.  105 

analysis  of  the  business  situation  that  it  behooves  every  one  of  the  members 
and  manufacturers  in  our  territory  to  sit  very  tight.  I  think  everyone  appre- 
ciates that  some  firms  feel  the  need  of  business  to  keep  their  shipping  depart- 
ments going  or  else  to  meet  obligations,  but  the  crux  of  the  whole  matter  is 
that  they  are  not  going  to  solve  their  problem  by  cutting  prices.  The  patter 
we  stand  as  a  whole,  the  sooner  will  buying  develop. 

In  January,  1919,  prices  on  shop  lumber  were  advanced  but  other 
prices  were  merely  reaffirmed.  There  was  a  weakened  demand  for 
lumber  during  the  winter  of  1919  and  a  strong  sentiment  arose  in  the 
association  for  lowering  prices.  The  Weyerhaeuser  companies  in 
particular  favored  lower  prices  and  telegraphed  to  that  effect  on 
January  19  to  F.  W.  Lewis,  of  the  Blackwell-Panhandle  sales  office. 
The  following  joint  reply  was  telegraphed  on  the  same  day  by  Mr. 
Lewis  and  the  managers  of  three  other  companies : 

McCann  and  full  attendance  of  Montana  mills  met  here  yesterday  and  fully 
realizing  conditions  decided  to  maintain  card  three  until  the  annual  meeting 
February  fifth  when  everybody  can  be  heard.  Cut  suggested  by  you  on  mixed 
woods  will  force  a  cut  of  like  amount  on  number  three  four  and  five  Western 
and  four  and  five  Idaho.  Impossible  to  get  in  touch  with  Oregon  on  short 
notice.  We  feel  we  should  hold  firm  until  annual  meeting.  Wire  your  decision. 

The  minutes  of  the  association's  annual  meeting  on  February  5, 
1919,  showed  that  "things  were  very  quiet,  but  that  there  was  a 
prospect  of  fairly  good  business  ahead."  Certain  reductions  were 
made  at  this  meeting  in  the  price  of  fir  and  larch,  but  the  price  of 
western  pine  was  advanced. 

In  the  spring  of  1919  demand  for  lumber  suddenly  revived,  and 
this  afforded  the  manufacturers  an  opportunity  of  which  they  made 
such  use  that  there  resulted  the  runaway  market  of  1919-20.  On 
April  15  the  McGoldrick  Lumber  Co.,  of  Spokane,  Wash.,  circular- 
ized its  competitors,  pointing  out  the  shortage  of  stocks  and  adding : 

Our  impression  is  that  the  Inland  Empire  manufacturers  could  easily  demand 
$1.00  to  $2.00  per  M  more  than  their  Common  lumber  at  the  present  time,  and 
that  they  would  receive  just  as  much  business  at  the  advanced  prices,  as  they 
are  getting  at  current  quotations. 

Of  course,  it  would  take  concerted  action  to  produce  this  result.  No  one  con- 
cern can  accomplish  it,  and  the  dealers  are  not  going  to  march  up  and  offer  to 
pay  a  dollar  or  two  dollars  per  M  additional,  unless  they  are  forced  to. 

All  that  needs  to  be  done,  according  to  our  judgment,  is  for  the  manufacturers 
to  make  a  substantial  advance  in  their  prices,  and  they  will  receive  as  heavy  a 
volume  of  business,  if  not  heavier,  than  is  now  coming  to  them. 

A  meeting  of  the  association  was  called  for  May  2  and  3, 1919.  The 
action  taken  at  this  meeting  may  be  described  in  the  words  of  W.  C. 
Geddes,  sales  manager  of  the  Oregon  Lumber  Co.,  who  was  present. 
Writing  to  David  Eccles,  manager  of  the  same  company,  on  May  6, 
Mr.  Geddes  said: 

On  the  matter  of  changing  prices,  will  state  that  I  fought  against  any  change 
whatever  in  any  way  on  any  items  unless  it  might  be  a  No.  3  Common  and 


106          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

there  seemed  to  be  a  determined  effort  to  advance  No.  2  and  Better  Common 
$3.00  to  $4.00  and  we  were  so  busy  in  meetings  during  the  day  that  the  Market 
Committee  could  not  get  together  until  evening.  We  met  Friday  night  and 
were  in  session  from  8.00  o'clock  until  1.30,  wrangling  out  these  changes.  I 
was  the  only  one  from  Eastern  Oregon  as  you  know,  on  the  Committee  and 
had  the  balance  of  the  committee  to  fight  alone  on  the  change. 

Further  advances  were  made  at  an  association  meeting  on  May 
24,  1919.  On  May  26  G.  E.  Stoddard,  of  the  Grand  Ronde  Lumber 
Co.,  wrote  the  association  as  follows: 

The  writer  was  not  in  attendance  at  the  meeting  held  in  Spokane  Saturday, 
but  have  heard  from  other  Eastern  Oregon  men  who  were  present  that  very 
material  changes  were  suggested  in  prices.  Please  send  us  an  outline  of  the 
present  market  as  it  was  represented,  at  the  earliest  possible  time,  so  that 
we  can  revise  our  quotations  accordingly. 

Another  meeting  of  the  association  was  held  on  June  27.  T.  A. 
McCann,  president  of  the  association,  described  the  results  in  a  let- 
ter of  June  30  to  E.  L.  Carpenter,  of  Minneapolis,  as  follows : 

Our  meeting  at  Spokane  was  so  optimistic  that  I  had  difficulty  in  holding 
from  an  advance  on  Western  Pine.  Fir  and  Larch  Dimension  was  advanced 
$1.50.  Discount  Card  No.  6  has  been  put  into  effect  by  everybody  on  Western 
Pine,  although  it  was  only  a  week  ago  that  Boise-Fayette  put  it  in  and  the 
Wayerhauser  Agency  has  been  taking  orders  on  Card  No.  5  even  as  late  as  the 
day  before  the  meeting;  but  it  is  generally  understood  that  Card  6  is  now  in 
effect.  In  spite  of  this  rather  belated  acknowledgment  of  this  market  situa- 
tion, the  Weyerhaeuser  interests  were  very  strong  for  a  further  advance. 

On  July  3,  1919,  the  Milwaukee  Land  Co.,  a  subsidiary  of  the 
Chicago,  Milwaukee  &  St.  Paul  Railway,  wrote  F.  W.  Lewis,  of  the 
Blackwell  &  Panhandle  sales  office,  in  part  as  follows: 

We  are  enclosing  herewith  copy  of  our  discount  card  No.  7,  effective  June  27th, 
1919,  and  carrying  advances  over  card  No.  6,  that  conformed,  so  we  understand, 
with  the  memos  handed  out  at  the  recent  meeting  of  the  W.  P.  M.  A. 

A  division  of  opinion  among  the  association  members  resulted  in 
a  considerable  divergence  in  prices  about  this  time,  but  the  shortage 
of  stock  throughout  the  country,  in  which  the  concerted  restriction 
of  production  under  various  association  auspices  had  been  a  sub- 
stantial factor,  made  almost  any  price  obtainable,  depending  on  the 
desire  of  the  particular  operator.  The  Weyerhaeuser  mills  were  the 
leaders  at  this  time  in  advancing  western  pine  prices,  and,  as  shown 
elsewhere  (p.  112),  their  policy  evoked  strong  criticism  from  their 
more  conservative  competitors. 

Early  in  September  the  Weyerhaeuser  companies  readjusted  their 
prices  on  a  somewhat  lower  basis.  The  reason  for  so  doing  was 
stated  by  R.  E.  Irwin,  of  the  Boise-Payette  Lumber  Co.,  one  of  the 
Weyerhaeuser  group,  in  a  letter  of  September  24,  as  follows: 

WTe  sold  quite  a  lot  of  stock  at  the  July  26th  advance,  which  ran  from  $8  to 
$10  higher  than  this  but  most  of  the  Inland  Empire  mills  felt  that  this  was  the 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          107 

list  that  should  apply  and  we  have  revised  our  prices  to  correspond  with  most 
of  the  Inland  Empire  mills. 

In  another  letter,  written  on  October  1,  1919,  Mr.  Irwin  stated 
that  the  advance  of  July  26  had  not  been  adopted  by  many  of  the 
mills,  explaining  that  "  on  account  of  so  much  of  this  talk  about 
profiteering  and  investigation,  some  of  the  lumbermen  have  gotten  a 
little  bit  nervous." 

The  readjustment  to  a  lower  basis  was  only  temporary,  however, 
and  in  October  and  November  further  advances  were  made  by  the 
Weyerhaeuser  companies  and  concurred  in  by  others,  though  the 
runaway  market  existing  involved  an  unusual  lack  of  uniformity  in 
price  quotations. 

Meanwhile,  news  of  the  Federal  Trade  Commission's  impending 
investigation  was  spread  throughout  the  trade.  Conferences  con- 
tinued to  be  held  between  the  western  pine  operators,  nevertheless — 
one  such  being  described  by  R.  E.  Irwin,  of  the  Boise-Payette  Lum- 
ber Co.,  in  a  letter  of  December  23,  1919,  as  follows : 

I  recently  attended  a  meeting  of  the  District  Sales  Managers  at  Spokane  and 
the  concensus  of  opinion  was  that  shop  in  this  territory  was  worth  $60,  $70  and 
$77  for  5/4  and  6/4;  8/4  No.  3  the  same,  with  $5  spread  for  8/4  No.  2  and 
better.  All  lath  were  subject  to  an  advance  of  $2.00 ;  Mouldings — L.  C.  L.  and 
carloads — list ;  Dimension  $4.00  over  the  Coast  list. 

Prices  continued  to  ascend  until  February,  1920,  when  the  Weyer- 
haeuser interests  publicly  announced  a  reduction  of  10  to  30  per  cent 
in  prices  and  a  policy  of  no  further  advances  for  a  period  of  several 
months.  Well-informed  competitors  pointed  out  that  the  reduction 
meant  merely  a  return  to  the  Weyerhaeuser  list  of  January  14.  In 
other  words,  prices  had  been  advanced  by  that  percentage  in  about 
one  month's  time.  They  also  claimed  that  the  Weyerhaeuser  mills 
were  not  in  a  position  to  take  on  any  new  business  at  the  reduced 
prices  for  several  months.  F.  W.  Lewis,  of  the  Blackwell-Panhandle 
sales  office,  expressed  this  view  in  a  telegram  of  February  26,  as 
follows : 

Weyerhaeusers  announcement  looks  good  on  paper  but  they  are  only  using 
their  January  fourteenth  card  number  six  which  they  never  really  advanced  as 
their  card  number  seven  never  was  used.  I  understand  most  of  their  stock  is 
going  to  their  own  yards  and  their  yard  price  to  consumers  not  cut.  Montana 
Coast  &  Inland  Empire  Mills  take  this  as  cheap  advertising  for  Case  &  his 
interests.  No  one  else  cutting  price.  No  stock  in  country  and  supplies  and  labor 
going  up.  Labor  advances  ten  per  cent  March  first.  No  snow  and  logs  very 
scarce  for  summer  sawing.  All  sick  are  improving  I  wrote  you  yesterday. 

Some  Weyerhaeuser  competitors  expressed  criticism  of  this  pub- 
licly heralded  reduction  in  price,,  just  as  others  had  criticized  the 
Weyerhaeuser  advances  made  the  previous  July.  Efforts  were  made 
to  hold  the  market  steady  notwithstanding  the  Weyerhaeuser  an- 


108  LUMBER   MANUFACTURERS7   TRADE   ASSOCIATIONS. 

nouncement.    On  February  25  the  McGoldrick  Lumber  Co.  wrote  its 
president  in  part  as  follows : 

Frank  Lewis  talked  with  Joe  Lansing  over  the  phone,  who  advises  that  Pol- 
leys  will  not  be  influenced  in  the  least  by  the  Weyerhaeuser  move  and  thinks  all 
Montana  Mills  will  maintain  their  present  cards  without  any  reductions.  In 
sending  his  new  card  will  guarantee  for  three  months  that  there  will  be  no  re- 
duction in  their  prices,  which  are  ten  to  eleven  dollars  higher  than  Weyer- 
haeuser but  do  not  guarantee  that  there  will  be  no  increase. 

About  this  time,  when  prices  had  passed  far  beyond  the  level  which 
the  more  conservative  manufacturers  had  characterized  as  "incred- 
ible "  and  "  anarchistic,"  it  was  proposed  to  put  on  an  advertising 
campaign  to  increase  the  demand  for  western  white  pine. 

The  foregoing  evidence  of  long-continued  efforts  to  set  prices  by 
concerted  action  deserves  to  be  considered  side  by  side  with  the  fol- 
lowing extract  from  a  letter  written  by  T.  A.  McCann,  the  president 
of  the  association,  to  the  secretary.  The  letter  was  written  on  De- 
cember 4,  1919,  and,  referring  to  the  Commission's  forthcoming  in- 
vestigation, said  in  part : 

As  our  activities  have  not  included  production  or  price  control,  we  of  course 
are  not  interested  other  than  when  the  facts  of  what  our  associated  activities 
amount  to  are  requested  we  can  present  them.  I  hope  the  balance  of  the 
lumber  Associations  are  in  as  good  shape  as  we  are  and  free  from  entangling 
alliance  on  prices. 

Prices,  costs,  and  margins. 

Certain  prominent  members  of  the  association,  more  conservatively 
inclined  than  the  majority,  frequently  made  objections  to  the  ad- 
vancement of  prices,  on  the  ground  that  they  had  no  relation  to  the 
cost  of  production  and  had  been  made  frankly  on  the  basis  ot  "  all 
the  traffic  would  bear." 

The  price  advances  made  by  the  association  as  early  as  December, 
1916,  called  forth  criticism  from  David  Eccles,  a  prominent  Oregon 
member.  Writing  to  Secretary  Cooper  on  January  7,  1917,  Mr. 
Eccles  protested  against  the  advances  made,  and  expressed  fear  that 
"if  matters  are  not  handled  conservatively  our  prices  will  become 
prohibitive  and  the  next  thing  will  be  a  break  in  the  market  and 
then  there  is  no  telling  where  the  finish  will  be."  Mr.  Eccles  favored 
"  a  policy  of  getting  a  good,  fair  profit,  but  at  all  times  keep  your 
product  within  reach  of  the  buying  public  and  not  force  them  to 
substitutes."  (2  L-l,  p.  91a.) 

As  shown  on  page  100,  there  was  no  halt  in  the  association's  price- 
fixing  activities  as  a  result  of  the  declaration  of  a  state  of  war  in 
April,  1917 — a  general  price  advance  being  made  on  April  25.  The 
opposition  of  David  Eccles  to  this  impending  advance  is  shown  by 


LUMBER  MANUFACTURERS*   TRADE  ASSOCIATIONS.  109 

the  following  extract  from  his  letter  of  April  24,  1917,  to  Secretary 
Cooper : 

The  situation  that  now  confronts  us  I  consider  rather  grave,  in  that  I  don't 
think  that  we  as  manufacturers  are  giving  sufficient  thought  to  what  the 
possibilities  might  be  with  the  rapid  advances  that  we  are  making  on  price 
lists,  and  while  we  stand  willing  to  go  with  the  majority,  I  am  opposed  to 
any  further  lists  being  put  out  that  are,  to  a  certain  extent,  property  of  the 
association.  In  other  words,  when  advances  are  made  they  become  general 
throughout. 

Mr.  Eccles  further  stated: 

We  are  on  record  as  against  advances  simply  because  some  sales  manager 
feels  that  it  is  time  to  put  up  the  price.  There  should  be  a  good  reason  at 
all  times;  something  beyond  the  mere  fact  that  there  is  a  shortage  right  now 
and  we  can  get  it. 

The  Western  Pine  Manufacturers  Association  has  not  developed 
a  cost  accounting  system  which  is  as  representative  and  compre- 
hensive as  the  systems  of  some  other  associations.  Although  no 
maximum  price  on  Inland  Empire  woods  was  fixed  by  the  Govern- 
ment during  the  war,  it  was  uncertain  for  a  time  to  what  woods  the 
price  fixing  program  would  be  extended.  Accordingly,  when  gov- 
ernmental fixing  of  maximum  prices  was  first  rumored  in  the  trade, 
the  Western  Pine  Manufacturers  Association  discussed  the  desir- 
ability of  compiling  a  statement  of  the  average  cost  of  production 
to  be  offered  as  a  basis  for  governmental  price  fixing. 

When  the  possibility  of  Government  price  fixing  was  first  seen, 
David  Eccles  of  the  Oregon  Lumber  Co.  wrote  Secretary  Cooper 
on  February  28,  1918,  in  part  as  follows : 

I  would  imagine  from  the  tenor  of  your  letter  that  there  is  a  possibility 
of  Government  price  fixing  in  the  lumber  industry  and  the  question  before  us 
at  this  time  is  to  have  sufficient  facts  to  present  to  an  investigating  committee 
that  will  allow  the  industry  as  a  whole  a  fair  return  of  profit  on  their  in- 
vestment. 

As  you  know,  I  have  for  some  time  past  contended  that  we  should  use  care 
and  discretion  in  putting  out  market  suggestions,  fearing  at  all  times  the 
probability  of  a  Federal  investigation  and  we  be  classed  as  profiteers  rather 
than  an  industry  run  on  conservative  lines  and  being  satisfied  with  a  reason- 
able margin  of  profit. 

The  contrast  between  the  spirit  in  which  some  prominent  interests 
in  the  Western  Pine  Association  approached  the  subject  of  govern- 
mental price-fixing  and  that  of  the  Southern  Pine  Association  is 
indicated  by  a  letter  from  the  directing  head  of  those  interests  to  the 
manager  of  his  western  mill.  Writing  on  March  23,  1918,  he  said : 

Mr. has  called  my  attention  to  your  letter  to  him  under  date  of 

March  7th,  in  regard  to  the  possibility  of  Government  Price  Fixing.  My  judg- 
ment is,  that  our  best  policy  for  the  present  is,  to  not  indulge  in  any  propa- 
ganda, either  as  individual  concerns  or  Associations,  along  these  lines.  It  is 


110          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

quite  apparent  that  the  efforts  which  Mr.  Keith  and  the  Committee  of  the  Na- 
tional have  been  making  are  putting  the  whole  lumber  fraternity  in  an  un- 
satisfactory attitude  towards  the  Federal  Trade  Commission.  The  plan  pro- 
posed by  Mr.  Keith  for  figuring  costs,  is,  in  my  judgment,  entirely  fictitious  and 
unreasonable.  The  best  evidence  of  this  fact  is,  that  the  line  of  argument 
used  will  establish  a  fair  average  for  Southern  white  (yellow)  pine  FOB 
cars  mills  at  somewhere  around  $45.00  per  M — the  same  line  of  argument,  if 
followed  in  the  case  of  Western  white  pine,  would  establish  as  a  fair  price 
FOB  mills  $38.00  to  $40.00  per  M  and  for  Northern  white  pine,  something  like 
$50.00  per  M.  These  prices  are  absurd  and  will  never  stand  investigation.  I 
believe  that  the  prices  we  are  getting  for  Northern  white  pine  and  for  Western 
white  pine  today,  are  fair,  cost  of  production  considered,  and  I  do  not  believe, 
if  we  behave  ourselves  and  go  along  and  attend  to  our  business  like  gentlemen, 
that  the  government  is  at  all  likely  to  disturb  us.  If,  however,  it  does  and  if 
it  becomes  necessary  to  make  an  appearance  and  seek  to  establish  costs  which 
will  enable  the  government  to  determine  what  is  a  fair  price,  I  should  want 
to  approach  the  matter  differently  and  in  a  different  spirit.  I  am  quite  certain 
the  Weyerhaeusers  feel  just  about  as  we  do. 

The  writer  went  on  to  say : 

The  lumber  industry  has  been  attacked  by  the  Federal  and  State  authorities 
in  the  past,  often  times  unjustly,  but  this  would  not  justify  us  at  the  present 
time,  when  our  country  is  at  war,  in  attempting  to  get  even  by  establishing 
exorbitant  prices  for  the  merchandise  we  are  producing  and  that  seems  to  be 
exactly  what  the  National  and  Southern  Pine  Associations  are  endeavoring  to 
do.  I  am  a  good  deal  more  concerned  at  the  present  time  in  keeping  our  plants 
operating  and  producing  the  lumber  which  is  so  much  needed,  than  I  am  about 
the  price  it  will  bring  and  I  should  feel  exactly  this  way  even  if  the  govern- 
ment should  decide  that  our  present  prices,  which  seem  to  be  reasonable,  are 
too  high  and  reduce  them. 

Our  great  duty  at  the  present  time  seems  to  me,  is  to  bend  every  energy  to- 
wards securing  as  near  as  possible  one  hundred  per  cent  production  at  our 
various  plants. 

I  have  no  doubt  but  that  you  and  Mr. have  discussed  ways  and  means 

of  bringing  the  eight  hour  production  up  to  the  highest  possible  point. 

This  is  the  clear  call  of  the  present  crisis  and  I  hope  we  can  all  pull  to- 
gether and  make  a  good  record. 

Writing  to  the  directing  head  on  March  27,  1918,  the  mill  man- 
ager said  in  part: 

I  note  what  you  state  in  connection  with  the  price  fixing  and  as  you  probably 
know  the  southern  people  are  controlling  the  National  Association  to  the  extent 

of  using  it  to  further  their  own  selfish  ends. 

******* 

However,  if  the  National  succeeded  in  forcing  the  Government  into  this 
or  by  its  policy  create  such  a  condition  that  the  Government  would  take 
hold  of  prices,  the  Western  people  would  not  want  to  be  without  statistics  to 
show  their  fairness  in  connection  with  making  prices. 

The  writer  of  the  above  stated  further: 

I  fully  agree  with  you  that  the  present  prices  call  for  the  highest  possible 
production  which  is  our  only  guide  at  the  present  time,  but  these  other  propo- 
sitions are  always  coming  up  in  connection  with  association  work  and  with 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          Ill 

the  changing  economic  conditions   it   seems  necessary   to   everyone   to   work 
through  the  association. 

On  April  4,  the  directing  head  wrote  the  mill  manager  in  part : 

I  have  yours  of  the  27th  instant  in  regard  to  Association  matters.  We  have 
no  thought  here  of  limiting  your  action  in  any  respect  in  the  Western  Pine 
Association — what  I  had  in  mind,  was,  to  caution  you  against  getting  involved 
in  any  cost  statements  for  the  Western  Pine  Association,  worked  out  along 
the  same  lines  that  Keith  used  for  the  Southern  Pine  people. 

Comparison  of  average  costs  with  average  prices. 

The  association  made  an  investigation  of  the  production  costs  of 
its  mills  for  the  period  April  to  June,  1918,  inclusive,  and  published 
the  results  in  an  official  circular  under  date  of  December  14,  1918. 
Only  30  mills  of  the  48  or  50  members  were  covered  by  the  com- 
pilation. The  average  cost  of  the  30  mills,  including  stumpage,  was 
$19.43  per  M  feet  for  western  pine,  $23.09  for  Idaho  white  pine, 
$17.85  for  fir  and  larch,  with  an  average  cost  for  all  mills  and  all 
woods  of  $20.26  per  M  feet.  It  was  stated  that  "  the  statistics  above 
given  are  a  true  representative  exhibit  of  Inland  Empire  costs  for 
the  period  covered." 

A  chart  prepared  by  the  association  shows  the  monthly  average 
selling  price  on  all  grades  of  Idaho  white  pine,  western  white  pine, 
white  fir,  fir  and  larch,  for  the  years  1915  to  1919,  inclusive.  The 
chart  shows  that  the  average  selling  price  of  Idaho  white  pine  for 
the  period  April  to  June,  1918,  ranged  from  $32.50  to  $35  per  M, 
compared  with  an  average  cost  of  $23.09.  The  average  selling  price 
of  western  pine  for  the  same  period  ranged  from  $26  to  $28.50  per  M 
feet,  as  against  an  average  cost  of  $19.43  per  M.  The  average  selling 
price  of  fir  and  larch  for  the  same  period  ranged  from  $20  to  $21.50, 
us  against  an  average  cost  of  $17.85.  On  the  association's  basis  of  75 
per  cent  production  of  western  pine,  5  per  cent  Idaho  white  pine,  and 
20  per  cent  other  woods,  the  average  price  on  all  woods  between  April 
and  June,  1918,  ranged  from  about  $25  to  $27.50  per  M  feet,  against 
an  average  cost  of  production  of  $20.26,  a  margin  of  about  $7  per  M 
feet,  which,  it  is  safe  to  say,  considerably  exceeded  any  margin  secured 
by  the  Inland  Empire  mills  in  previous  years.  The  year  1917  was  a 
prosperous  one  for  the  lumber  industry,  yet  the  average  selling  price 
of  western  pine  ranged  from  $23  to  $25  per  M,  Idaho  white  pine  from 
$23  to  $35,  and  other  woods  from  $13  to  $21  per  M. 

In  August,  1919,  thirty- two  mills  of  the  Western  Pine  Manufac- 
turers' Association  agreed  to  submit  their  monthly  cost  statements 
to  the  association.  However,  the  first  compilation,  which  was  for 
the  month  of  July,  1919,  covered  the  costs  of  only  9  mills.  The  aver- 
age cost  shown  was  $23.29  per  M  feet,  an  increase  of  $3.03  per  M  over 
the  costs  shown  in  the  April-June,  1918,  compilation  previously  de- 


Ill 


113 


,t  i 


*  : 


:  ii 


114  LUMBER  MANUFACTURERS  *   TRADE  ASSOCIATIONS. 

however,  southern  pine  began  a  series  of  substantial  price  advances, 
and  was  followed  shortly  by  Douglas  fir,  a  shortage  of  production 
and  of  mill  stocks  being  a  cogent  factor  in  both  cases.  These  ad- 
vances in  the  two  chief  construction  woods  swung  the  demand  to  west- 
ern pine,  with  the  result  that  sharp  advances  took  place  in  October, 
notwithstanding  that  western-pine  production  for  the  year  up  to  that 
time  had  outrun  orders.  The  American  Lumberman  described  this 
situation  in  its  review  of  the  market  as  follows: 

The  market  for  western  pines  has  shown  much  improvement  since  the  recent 
advances  in  southern  pine  and  Douglas  fir,  with  considerable  western  pine 
yard  stock  from  the  Inland  Empire  beginning  to  move  to  retailers,  principally 
in  the  Middle  West.  A  better  demand  for  shop  is  also  noted  and  this  class  of 
stock  is  becoming  increasingly  scarce  at  the  mills.  No.  3  and  better  shop  from 
the  Inland  Empire  has  during  the  last  few  days  been  advanced  from  $7  and 
white  and  sugar  pine  shop  from  California  and  southern  Oregon  has  been 
advanced  $7  to  $10.  Eight-quarter  stock  is  practically  unobtainable. 

The  American  Lumberman  of  October  22  commented  on  the  con- 
tinued improvement  in  the  western  pine  market  and  stated  in  that 
connection : 

Shop  from  the  Inland  Empire  also  is  becoming  very  scarce  and  prices  have 
advanced  $5  to  $10  on  6/4,  while  the  tendency  on  all  other  thicknesses  but  4/4 
is  distinctly  upward.  Four-quarter  stock  remains  in  easy  supply. 

It  has  been  the  custom  of  the  American  Lumberman  to  print  each 
week  the  f.  o.  b.  mill  prices  of  important  western  pine  items,  under  a 
Portland,  Oreg.,  date  line,  and  to  specify  the  information  under  the 
caption  "  Special  telegram  to  the  American  Lumberman."  The  head- 
quarters of  the  association  are  at  Portland,  but  it  is  not  definitely 
known  to  be  the  source  of  the  information.  The  issue  of  October  22, 
1921,  stated  that  while  prices  were  unchanged  from  last  week,  "  a 
$5  advance  is  expected  at  any  time."  The  American  Lumberman  of 
November  19,  under  its  special  telegram  from  Portland,  Oreg., 
showed  advances  in  No.  2  and  No.  3  boards  of  from  $3  to  $4  per  M 
feet. 

Analysis  of  present  prices. 

The  reductions  below  the  abnormal  price  level  of  February,  1920, 
have  received  much  emphasis  in  lumber  circles  as  a  part  of  an  ad- 
vertising campaign  to  revive  building,  stimulate  demand,  and  pre- 
vent a  further  price  decline.  A  true  perspective  of  the  course  of  the 
market  can  not  be  gained  from  such  a  comparison,  but  only  by  a 
comparison  between  present  quotations  and  those  current  when 
prices  were  admittedly  profitable,  though  far  below  the  abnormally 
high  levels  of  February,  1920.  In  a  general  way  the  prices  obtain- 
ing during  the  war  period  afford  such  a  basis  for  comparison. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          115 

Comparison  of  present  prices  with  war-time  prices. 

Idaho  white  pine. — A  test  made  by  the  Forest  Service  indicates 
that  about  57  per  cent  of  the  Idaho  white  pine  production  is  graded 
as  No.  2  common  and  better.  This  57  per  cent  is  composed  of  about 
16  per  cent  selects,  7  per  cent  No.  1  and  No.  2  shop,  and  17  per  cent 
each  of  No.  1  and  No.  2  common.  Compared  with  quotations  pre- 
vailing in  May,  1918,  quotations  as  given  in  the  lumber-trade  press 
the  latter  part  of  December,  1921,  are  above  the  war-time  level  by 
from  83  to  116  per  cent  on  selects,  60  to  76  per  cent  on  No.  1  common, 
and  24  to  40  per  cent  on  No.  2  common.  Figures  on  Idaho  white  pine 
shop  lumber  are  not  available,  but  there  is  no  reason  to  suppose  that 
a  comparison  for  it  would  show  any  materially  different  result. 

On  No.  3  common  and  poorer  grades  of  Idaho  white  pine,  which 
form  about  40  per  cent  of  the  production,  present  quotations  are 
from  8  to  16  per  cent  below  the  May,  1918,  level,  but  they  are  from 
20  to  53  per  cent  above  the  February,  1917,  prices. 

Western  yellow  pine. — A  study  by  the  Forest  Service  indicates  that 
about  43  per  cent  of  the  western  yellow  pine  production  is  graded  as 
No.  2  common  and  better.  This  43  per  cent  is  composed  of  about  9 
per  cent  of  selects,  14  per  cent  No.  1  and  No.  2  shop,  6  per  cent  of  No. 
1  common,  and  14  per  cent  of  No.  2  common.  Compared  with  quota- 
tions prevailing  in  May,  1918,  present  trade  press  quotations  on  selects 
are  from  8  to  55  per  cent  above,  on  No.  1  common  they  are  from  53  to 
67  per  cent  above,  and  no  No.  2  common  are  about  the  same  or  some- 
what less. 

Present  trade  press  quotations  on  No.  3  common  and  poorer  grades 
of  western  pine,  which  form  nearly  57  per  cent  of  the  production, 
are  substantially  less  than  those  of  May,  1918,  but  are  nevertheless 
higher  than  those  of  February,  1917. 

The  trade  press  quotations  referred  to  were  those  appearing  late 
in  December,  1921. 

Comparison  of  present  prices  with  1920  "  runaway  "  market  prices. 

In  the  foregoing  paragraphs  the  comparison  is  between  current 
prices  and  war-time  prices.  It  will  be  remembered  that  subsequent 
to  the  war  the  general  shortage  of  supply,  to  which  the  concerted  cur- 
tailment contributed,  became  so  marked  that  the  trade  began  buying 
hysterically,  and  this  resulted  in  what  was  known  as  a  "  runaway  " 
market  until  it  reached  a  point  where  the  public  ceased  to  buy. 

The  current  prices  are  below  the  peak  of  this  "  runaway  "  market 
of  1919  and  1920  by  as  much  as  43  per  cent  on  No.  3  Idaho  white  pine 
common  and  68  per  cent  on  No.  3  western  pine  common. 

On  the  other  hand,  the  better  grades  of  western  pine  show  a 
much  smaller  percentage  of  reduction  and  in  some  cases  no  reduc- 


116  LUMBER   MANUFACTURERS  *   TRADE   ASSOCIATIONS. 

tion  at  all  from  the  runaway  peak  prices  of  1920.    In  fact  the  better 
grades  of  Idaho  white  pine  are  now  quoted  from  4  to  20  per  cent 

higher  than  at  the  peak  of  the  runaway  market  of  two  years  ago. 

i 
Conclusions. 

The  following  conclusions  may  be  generally  deduced  from  the 
previous  statements. 

None  of  the  grades  of  Idaho  white  pine  or  western  pine  have 
returned  to  the  levels  of  February,  1^17,  which  in  turn  were  con- 
siderably above  the  levels  of  previous  years. 

Most  of  the  grades  of  these  two  woods  are  far  above  the  war-time 
price  levels. 

On  the  better  or  select  grades  of  Idaho  white  pine  the  prices  are 
substantially  in  excess  of  the  highest  market  level  ever  before 
known. 

On  the  better  or  select  grades  of  western  pine  prices  have  declined 
from  the  peak  of  1920  but  are  still  above  the  high  levels  of  war- 
time prices. 

Marked  reductions  are  chiefly  shown  in  the  lower  grades  of  both 
woods,  but  even  they  have  not  receded  to  the  levels  of  February,  1917. 

Price  activities  of  box  bureau. 

A  subsidiary  or  affiliated  body  of  the  Western  Pine  Manufacturers' 
Association  is  known  as  the  Box  Bureau,  and  is  composed  of  the 
leading  manufacturers  of  box  shooks  and  boxes  in  the  association 
territory.  The  fruit-growing  and  meat-packing  industries  are  large 
consumers  of  box  material  and  during  the  war  the  Government  was 
a  heavy  purchaser.  The  Box  Bureau  has  served  as  the  medium 
through  which  prices  have  been  agreed  upon  for  box  material  and 
boxes  since  its  organization  in  1917.  In  1916  the  leading  box  mills 
fixed  an  agreed  price  upon  the  meat-case  business  and  agreed  to 
prorate  the  total  business  among  themselves  by  certain  percentages. 
There  has  been  a  marked  degree  of  cooperation  on  the  subject  of 
prices  between  the  Box  Bureau,  the  California  box  manufacturing 
interests,  and  the  spruce  box  manufacturing  interests  of  the  Pacific 
coast. 

On  September  27, 1916,  the  Knapp-Cheney  Co.,  of  Portland,  Oreg., 
wrote  D.  C.  Eccles,  of  the  Oregon  Lumber  Co.,  in  part  as  follows : 

After  the  adjournment  of  the  Pine  Lumber  Meeting  held  in  Portland  last 
Thursday,  Mr.  Cooper,  Secretary  of  the  Western  Pine  Manufacturers'  Asso- 
ciation, called  on  the  writer  to  obtain  information  regarding  our  view  of 
the  proper  method  for  handling  inquiries  coming  to  our  western  factories 
covering  meat  crate  requirements  of  middle  western  packers. 

I  gave  Mr.  Cooper  full  information  at  that  time  regarding  quotations  which 
we  had  outstanding,  and  advised  him  that  the  only  quotations  we  had  out- 
standing were  to  the  Cudahy  Packing  Company,  covering  fifty  cars  on  which 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          117 

we  quoted  on  a  basis  of  $15.50  per  M  net  footage  f.  o.  b.  factory,  and  another 
quotation  to  a  small  packer  in  territory  taking  a  53  cent  rate  from  Bend  at 
prices  one  dollar  to  three  dollars  above  that  named  Cudahy  on  their  fifty  car 

contract. 

******* 

We  are  anxious  that  the  plans  discussed  by  the  box  manufacturers  present  at 
the  pine  meeting  above  referred  to,  may  be  matured,  and  we  so  advised  Mr. 
Cooper.  In  the  meantime  we  trust  that  none  of  the  pine  people  are  separately 
quoting  on  packing  house  business,  but  that  we  can  consolidate  our  interests 
and  divide  the  business. 

******* 

May  I  ask  that  you  write  me  fully  your  ideas  with  regard  to  this  subject. 
I  feel  that  this  situation  might  best  be  handled  by  an  agreement  between  three 
or  four  of  our  western  pine  shook  manufacturers  to  each  quote  on  the  business 
of  one  of  the  packers,  and  all  other  manufacturers  agree  to  take  a  certain  por- 
tion of  this  business.  Then  we  would  not  all  be  quoting  each  of  the  packers, 
and  be  openly  competing  to  force  the  market  down. 

I  feel  also  that  we  should  all  refuse  to  allow  any  broker  to  quote  for  us ;  nor 
should  we  agree  to  furnish  stock  to  any  broker  who  is  catering  to  the  packing- 
house trade. 

The  proposed  arrangement  was  quickly  effected,  as  indicated  by  a 
letter  of  October  7,  1916,  from  the  Knapp-Cheney  Co.  to  Secretary 
Cooper.  It  read  in  part  as  follows : 

As  you  understand,  those  manufacturers  of  Pine  boxes  in  Oregon,  Washington 
and  Idaho,  who  are  able  to  cater  to  the  meat  crate  trade,  have  agreed  among 
themselves  to  handle  this  trade  in  a  cooperative  basis,  and  divided  the  business 
so  that  it  may  be  properly  handled. 

We  got  a  rather  later  start  in  formulating  our  cooperative  understanding,  so 
tHere  is  some  question  of  doubt  in  my  mind,  and'  possibly  also  in  the  minds  of 
others,  regarding  the  plan  of  distribution  of  such  business  as  comes  to  this 
territory. 

The  details  of  the  apportionment  were  outlined  in  a  letter  of  Octo- 
ber 16  from  Secretary  Cooper  to  D.  C.  Eccles,  as  follows : 

Yesterday  the  Potlatch  Lumber  Company,  Knapp-Cheney,  Wenatchee  Box 
Agency,  the  Western  Pine  Manufacturing  Company,  met  here  and  decided  to 
pro-rate  the  meat  case  business  as  follows:  16  2/3%  to  Potlatch,  12  1/2%  to 
Knapp-Cheney,  4  1/6%  to  Cascade,  4  1/6%  to  Deer  Park,  16  2/3%  to  We- 
natchee, 33  1/3%  to  Oregon  Mills,  12  1/2%  to  Western  Pine  Mfg.  Co. 

This  was  based  on  what  we  assumed  were  the  requirements  of  each  district. 
Assuming  that  the  Armour  contract  would  cover  two  hundred  and  fifty  cars, 
this  would  give  eighty  to  the  Oregon  mills. 

It  was  reported  by  some  that  you  had  taken  part  of  the  Cudahy  business  at 
$23.00  and  $24.00,  Missouri  River  rate.  It  was  thought  that  if  you  had,  this 
should  be  pro-rated  into  your  share  of  cars  on  all  of  the  business,  as  it  was 
felt  that  all  of  the  packing  house  business  should  be  handled  in  the  same  way. 

It  was  further  decided  that  the  Knapp-Cheney  people,  yourselves  and 
Wenatchee  would  be  the  only  ones  to  quote  on  this  business  and  then  it  would 
be  pro-rated  whoever  got  it. 

Can  you  advise  me  as  to  whether  you  did  secure  some  of  the  Cudahy  busi- 
ness or  not.  I  wired  you  yesterday,  relative  to  the  canning  case  business  and 


118          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

received  your  reply.  That  this  may  be  clearly  understood,  the  idea  was  that 
no  prices  lower  than  $19.50  based  on  the  gross  feetage  of  lumber,  f.  o.  b.  the 
mill,  should  prevail,  and  that  all  delivered  prices  should  be  based  on  the  Spo- 
kane rate  of  freight.  In  view  of  the  high  price  of  lumber  at  present,  this 
was  believed  to  be  no  more  than  an  equable  price.  Your  telegram  saying  that 
the  Oregon  Mills  would  be  willing  to  quote  these  prices,  was  received  yesterday 
and  I  am  so  advising  the  others  who  were  present. 

A  circular  issued  by  the  Western  Pine  Manufacturers  Association 
Box  Bureau  on  January  23,  1918,  summarized  the  box  situation  as 
follows : 

Summarizing  the  Washington  situation:  We  have,  1st.  A  heavy  demand  for 
all  grades  of  lumber  and  box  shocks  from  our  government,  our  Allies,  and  for 
domestic  consumption.  2nd.  A  shortage  of  logs.  3rd.  The  substitution  of 
Spruce  for  Fir  in  the  grades  of  No.  3  Clear,  No.  1  Common  Dimension,  and 
Select  Common,  which  has  been  so  successfully  worked  out  that  it  relieves 
any  immediate  danger  of  an  oversupply,  of  box  lumber  and  materially  strength- 
ens the  Shook  Market. 

The  above  represents  the  situation  confronting  the  majority  of  mills.  Indi- 
vidual exceptions  will  be  handled  diplomatically  and  to  the  best  advantage  of 
all  concerned. 

Writing  his  own  company  on  February  7,  1919,  David  C.  Eccles, 
president  of  the  Oregon  Lumber  Co.,  described  price  changes  made 
at  an  association  meeting,  and  continued : 

Mr.  Mimnaugh  or  Stoddards  were  not  at  the  meeting  so  did  not  have  a 
chance  to  discuss  with  them  the  box  situation.  Turned  the  recap  of  shipments 
over  to  Irwin,  who  remained  in  Spokane  for  the  box  meeting  which  is  being 
held  today.  From  what  I  could  get  from  Joe  Stoddard  and  Ravenstroft,  the 
matter  of  continuing  the  box  bureau  is  entirely  satisfactory  with  them  and  such 
discontent  as  has  been  expressed  by  the  former  two  gentlemen  has  principally 
originated  from  our  Salt  Lake  friend.  Both  Mr.  Barton  and  Mr.  Irwin  stated 
that  they  wanted  no  change,  and  even  though  the  other  mills  decided  to  go  it 
alone,  they  would  prefer  to  have  the  box  business  handled  as  it  is  now.  So  with 
their  output  we  have  sufficient  capacity  to  enter  into  any  contract  that  might 
be  offered.  We  can  go  along  as  usual,  letting  the  others  trail  in  if  they  see  fit, 
and  in  the  meantime  don't  get  out  by  themselves  and  muss  up  the  price  situ- 
ation. 

On  May  6,  1919,  W.  C.  Geddes,  of  the  Oregon  Lumber  Co.,  wrote 
Mr.  Eccles,  describing  price  advances  just  made  at  an  association 
meeting,  and  adding : 

On  the  box  situation,  there  was  a  sort  of  an  informal  meeting  of  some  of  the 
Spokane  mills  and  ourselves  and  Bend,  and  they  felt  until  the  frost  danger  was 
past  it  was  no  use  to  put  out  quotations  and  none  have  been  made  in  Idaho  or 
Utah,  or  Colorado.  They  felt  that  we  should  get  at  least  17^  for  the  heavy 
apple  box  and  160  for  the  light  apple  box  on  a  15^  to  a  200  rate.  There  have 
been  some  very  cheap  prices  made  in  the  Yakima  and  some  business  closed,  but 
nothing  done  in  Colorado,  Idaho,  nor  Utah.  We  had  a  frost  in  Idaho  Saturday 
night  and  one  here  Sunday  night,  but  have  not  yet  been  able  to  get  reports  as 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          119 

to  how  much  damage  has  been  done,  although  in  Idaho  the  prunes  will  be 
damaged  to  some  extent  as  well  as  the  peaches.  In  this  section,  do  not  think 
the  frost  has  injured  anything. 

On  September  24,  1919,  T.  A.  McCann,  president  of  the  Western 
Pine  Manufacturers'  Association,  wrote  Secretary  Cooper  in  part 
as  follows : 

I  have  just  seen  a  letter  from  Mr.  Geddes  to  Mr.  Taylor  and  I  am  not  at  all  in 
sympathy  with  it.  This  is  in  relation  to  sending  Mr.  Rowley  to  Klamath  Falls 
to  find  out  in  regard  to  a  sale  reported  to  have  been  made  to  Libby,  McNeill  & 
Libby. 

If  the  Box  Bureau  is  going  to  take  it  upon  itself  to  gather  information  in  re- 
gard to  prices  on  contracts,  then  send  out  some  of  the  bulletins  which  I  have 
seen,  it  will  be  my  express  purpose  to  see  that  that  department  is  divorced  from 
the  Western  Pine  Association  at  once  and  that  we,  as  members  of  that  Bureau, 
will  withdraw,  as  there  is  a  great  deal  of  evidence  which  would  be  incriminating 
should  there  be  an  investigation.  I  have  told  Mr.  Taylor  this  this  morning  and 
I  shall  be  very  much  obliged  to  you  if  you  will  investigate  it  from  your  stand- 
point. 

This  particular  letter  of  course  did  not  emanate  from  the  office  of  the  Asso- 
ciation, but  a  recognized  officer  of  the  Association  going  out  on  a  trip  the  sole 
purpose  of  which  is  to  get  information  on  sales,  I  am  unalterably  opposed. 

With  the  general  hysteria  prevailing  in  connection  with  the  high  cost  of 
living,  things  that  are  harmless  in  themselves  could  be  made  to  read  very  lurid 
in  the  public  press,  and  some  of  the  Box  bulletins  which  I  have  seen  would  be 
so  twisted  that  I  am  afraid  our  Association  work  would  be  seriously  hurt. 

Replying  on  September  26,  Secretary  Cooper  said  in  part : 

I  have  your  letter  of  the  24th  relative  to  the  Libby,  McNeill  &  Libby  business 
and  the  Box  Bureau's  work. 

I  am  quite  strongly  in  accord  with  what  you  say,  and  have  been  looking  over 
some  of  the  Box  Bureau  circulars.  I  think  the  ones  you  mean  refer  to  some  of 
those  bearing  on  general  conditions  and  while  I  don't  think  there  was  any  intent 
wrong,  the  wording  of  many  of  them  might  be  readily  misconstrued. 

PRICE  ACTIVITIES  OF  MONTANA  LUMBER  MANUFACTURERS. 

About  15  manufacturers  located  in  the  State  of  Montana  have 
comprised  the  above  organization,  practically  all  of  them  also  being 
members  of  the  Western  Pine  Manufacturers'  Association.  The 
Montana  association  is  practically  a  district  organization  of  the 
larger  body,  but  it  has  compiled  price  lists  of  its  own  for  use  within 
the  State.  These  lists  are  followed  by  the  other  members  of  the 
Western  Pine  Association  who  ship  into  Montana,  while  on  ship- 
ments outside  the  State  the  Montana  association  mills  use  the  price 
lists  of  the  Western  Pine  Association. 

Frequently  the  concessions  or  prices  adopted  by  one  of  the  asso- 
ciations have  been  circulated  by  the  other  association  among  its  mem- 
bers. The  price  changes  made  by  the  Montana  association  were  fre- 
91321°— 22 9 


120          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

quently  dependent  on  the  changes  made  by  the  Western  Pine  Manu- 
facturers' Association,  and  at  times  the  secretary  of  the  Montana 
association  tried  to  influence  the  action  of  the  Western  Pine  Asso- 
ciation. 

Some,  if  not  all,  of  the  members  of  the  Western  Pine  Manufac- 
turers' Association  who  were  not  members  of  the  Montana  Lumber 
Manufacturers'  Association  adopted  the  price  lists  of  the  latter 
association  for  all  sales  made  in  the  State  of  Montana. 

The  Montana  association  during  at  least  two  of  its  annual  meetings 
officially  decided  on  the  individual  to  be  recommended  as  the  Mon- 
tana member  of  the  board  of  directors  of  the  Western  Pine  Manufac- 
turers' Association. 

Some  of  the  meetings  of  the  Montana  Lumber  Manufacturers' 
Association  were  held  outside  the  State  of  Montana,  at  Spokane, 
Wash.  There  were  present  at  most  of  these  meetings,  as  well  as  at 
some  meetings  held  within  the  State,  various  prominent  members  of 
the  Western  Pine  Manufacturers'  Association,  including  its  secretary. 

A  comprehensive  statement  of  the  understanding  between  the 
two  associations  as  to  their  respective  fields  is  contained  in  a  cir- 
cular of  September  1,  1915,  issued  by  the  secretary  of  the  Western 
Pine  Manufacturers'  Association  to  his  members.  It  reads  as  fol- 
lows: 

At  a  meeting  yesterday  in  Missoula,  Mont.,  of  the  lumber  manufacturers  of 
Montana  at  which  both  the  Great  Northern  and  Northern  Pacific  mills  were 
fully  represented,  representatives  from  this  district  took  up  with  the  manu- 
facturers there  the  question  of  their  using  our  discount  sheet  as  of  August  28th, 
and  the  resolutions  accompanying  it,  and  adhering  strictly  to  these.  It  de- 
veloped that  the  Montana  manufacturers  would  be  willing  to  do  this,  provided 
we  adopted  and  used  their  list  for  short  rates  in  Montana,  in  making  sales  in 
that  territory. 

It  also  developed  that  at  certain  local  points  in  Montana,  Montana  Mills' 
price  was  below  ours  owing  to  external  competitive  conditions  which  could 
not  be  avoided  but  that  along  the  line  of  the  Great  Northern  and  at  other 
points,  their  price  was  above  that  of  the  mills  in  this  district.  It  is  there- 
fore understood  that  the  mills  in  this  district  should  respect  the  Montana  price 
list  and  concessions,  and  that  they  in  turn  would  respect  the  concession  sheet 
of  August  28th  of  this  territory,  outside  of  Montana.  In  other  words,  the 
mills  who  were  in  attendance  at  our  meeting  here  last  week,  should  main- 
tain the  discount  sheet  absolutely  in  'Montana  except  where  the  Montana 
list  is  higher,  and  in  that  case  they  shhould  follow  the  Montana  list  and 
discount. 

If  members  are  selling  in  Montana,  we  should  be  very  glad  to  see  that 
they  are  provided  with  a  Montana  list,  and  will  be  very  glad  to  have  them 
write  us  at  once. 

The  general  feeling  of  the  meeting  was  that  better  prices  for  the  future 
could  be  relied  on  in  view  of  the  improved  conditions  of  trade  that  are 
promised  in  all  directions. 

Please  keep  this  circular  for  reference. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  121 

RELATION   BETWEEN   ASSOCIATION'S   PRICE    FIXING   ACTIVITIES 
AND  ITS  USE  OF  COMMON  FREIGHT  BASING  POINT. 

An  important  phase  of  the  association's  methods  of  standardizing 
prices  which  is  well  exemplified  in  its  activities  and  which  is  typical 
of  the  activities  of  other  lumber  manufacturers'  associations  not 
here  discussed,  involves  what  is  known  as  the  common  basing  point 
system.  In  any  territory  where  the  different  producing  points  take 
varying  freight  rates  to  the  principal  consuming  markets,  this  varia- 
tion would  naturally  result  in  numerous  variations  in  the  delivered 
price,  even  though  f.  o.  b.  mill  prices  were  the  same.  If  it  is  sought 
to  avoid  such  variations  the  only  feasible  method  is  to  base  prices, 
not  f .  o.  b.  the  individual  producer's  plant,  but  to  select  some  common 
point  agreeable  to  all  the  producers  and  use  that  as  a  substitute  for 
an  individual  f.  o.  b.  mill  basis.  Accordingly  the  members  of  the 
Western  Pine  Manufacturers'  Association  have  been  basing  their 
prices  generally  on  Spokane  for  many  years,  and  the  association 
price  lists  show  the  delivered  prices  with  Spokane  as  the  basing 
point. 

The  use  of  the  Spokane  basis  means  that  all  members  which  have 
a  lower  rate  to  the  consuming  markets  make  an  added  profit  on  ship- 
ments taking  a  less  rate  than  that  from  Spokane,  on  which  basis 
their  quotations  are  made  and  the  consumer  pays  a  charge  for  a 
cost  not  actually  incurred.  Like  uniform  grading,  uniform  weights, 
etc.,  the  common  basing  point  may  be  used  as  an  instrument  either 
to  further  or  to  restrict  competition,  but  so  far  as  the  lumber 
manufacturing  industry  is  concerned,  the  common  freight  basing 
point  has  been  an  incident  of  the  organized  activities  of  the  manu- 
facturers in  eliminating  or  restricting  price  competition.  The  West- 
ern Pine  Manufacturers'  Association  filed  an  intervening  petition 
with  the  Commission  opposing  the  issuance  of  formal  complaint  to 
try  out  the  status  of  the  common  basing  point  in  the  steel  industry. 

An  anomalous  development  of  the  basing  point  system  of  pricing 
has  grown  out  of  the  close  cooperation  which  has  existed  between  the 
Western  Pine  Manufacturers'  Association  and  the  West  Coast  Lum- 
bermen's Association.  Two  of  the  woods  produced  in  the  Inland 
Empire  are  larch  and  fir,  and  these  are  used  largely  for  the  same 
purposes  as  the  fir  produced  west  of  the  Cascades,  in  the  territory  of 
the  West  Coast  Lumbermen's  Association.  The  Inland  Empire  mills 
have  the  advantage  in  freight  rates  to  the  east  over  the  west  coast 
mills  and  are  in  a  position  to  lay  down  their  lumber  in  eastern  mar- 
kets at  considerably  less  than  the  coast  mills,  even  though  their  f .  o.  b. 
mill  prices  were  the  same.  The  difficulty  was  solved  to  the  advantage 
of  both  districts  by  the  Western  Pine  Manufacturers'  Association 
adopting  not  only  the  mill  prices  of  the  West  Coast  Lumbermen's 
Association  on  fir,  but  the  coast  freight  rates  as  well.  The  effect  of 


122  LUMBER    MANUFACTURERS '   TRADE   ASSOCIATIONS. 

this  action  was  to  make  the  coast  the  basing  point  for  Inland  Empire 
fir  and  larch,  which  at  no  time  was  within  hundreds  of  miles  of  the 
coast. 

When  the  West  Coast  Lumbermen's  Association  adopted  a  new 
basic  list  in  February,  1919,  the  necessity  for  the  Western  Pine  Asso- 
ciation revising  its  basic  prices  on  fir  and  larch  became  apparent,  and 
for  some  time  thereafter  both  basic  lists  and  concession  cards  for  In- 
land Empire  fir  and  larch  were  based  upon  the  coast  prices  and  the 
coast  freight  rates. 

The  Weyerhaeuser  Sales  Co.,  in  a  bulletin  to  its  salesmen  on  Feb- 
ruary 7,  1919,  gave  the  following  instructions : 

1.  Sell  Fir  &  Larch  Dimension,  Plank  and  Timbers  and  all  B  &  Btr  Larch 
on  basis  of  West  Coast  F.'r,  applying  Fir  Discount  No.  24  and  using  the  Coast 
rates.  In  other  words,  when  figuring  Fir  &  Larch  Dimension,  Plank  and  Timbers 
you  will  figure  the  stock  exactly  as  though  it  were  coming  from  the  Coast,  using 
the  Fir  list,  Fir  Discount  No.  24  and  the  Fir  Rate, — and  the  B  &  Better  Spokane 
rate  and  on  the  regular  Idaho  basis,  and  your  notation  as  to  the  rate  on  which 
the  car  is  sold  will  always  be  the  Spokane  rate  rather  than  the  coast  rate. 

The  Crookston  Lumber  Co.,  one  of  the  Shevlin-Carpenter  inter- 
ests, issued  similar  instructions  to  its  salesmen  on  February  14,  1919. 

The  method  of  treating  freight  which  was  involved  in  this  policy 
of  the  association  members  is  shown  by  the  following  extracts  from  a 
letter  of  the  Rawson  Works  Lumber  Co.,  of  Spokane,  Wash.,  on 
February  21,  1920,  to  the  association : 

Under  our  contract  with  Bradford-Kennedy  Company,  we  shipped  consider- 
able Fir  Dimension.  This  dimension  was  sold  under  Cards  6,  7  and  8,  which 
refer  to  Rail  B  Coast  price  list. 

Since  I  have  been  putting  in  all  of  my  time  on  the  Kamiah  work,  I  have  been 
checking  over  the  shipments  to  Bradford-Kennedy  Company.  I  find  that  the 
dimension  shipped  under  cards  6,  7  and  8  was  invoiced  on  Spokane  rates  of 
freight.  I  contend  that  in  using  the  Rail  B  price  list,  the  rates  from  the  coast 
should  be  used  in  pricing  dimension,  but  that  freight  should  be  deducted  on  the 
basis  of  the  Spokane  rate. 

Bradford-Kennedy  Company  cannot  see  it  that  way.  Possibly  they  are  right, 
but  I  know  that  some  of  the  mills  have  used  the  coast  rates,  allowing  freight  to 
be  deducted  on  the  basis  of  Spokane  rates  only. 

The  Secretary  replied  on  February  24: 

In  reply  to  yours  of  the  21st  I  think  your  contention  is  correct  about  the 
method  of  pricing  dimension.  When  the  mills  in  the  Inland  Empire  adopted  the 
Coast  basis  of  selling  in  order  to  conform  with  the  spreads  on  lengths  etc., 
they  also  sold  on  the  basis  of  the  Coast  rate,  the  idea  being  that  the  Coast  was 
the  competition  that  they  had  to  meet  and  that  the  Coast  market  at  any  time 
very  largely  governed  their  own.  The  proper  method  then  was  to  figure  the 
delivered  price  on  the  Coast  rate  and  the  Coast  list  but  actually  deduct  the 
Spokane  rate  of  freight,  which  would  be  the  actual  freight  paid. 

I  think  the  above  handling  of  this  proposition  would  be  the  natural,  common 
sense  way  to  do  it  and  I  know  it  was  the  method  used  by  practically  all  the 
Inland  Empire  manufacturers  at  the  time  they  were  using  the  Coast  list. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          123 

RELATION   BETWEEN   ASSOCIATION'S   PRICE    FIXING   ACTIVITIES 
AND  PRACTICE  OF  SCANT  SAWING. 

There  is  a  long-established  practice  in  the  lumber  industry  of 
sawing  lumber  into  sizes  which  fall  short  of  the  dimensions  by  which 
the  stock  is  designated.  For  instance,  a  piece  of  2  by  4  is  cut  less 
than  full  size  and  1,000  feet  of  2  by  4's  does  not  contain  a  full  1,000 
board  feet.  This  practice  is  known  in  the  trade  as  "  scant  sawing," 
and  as  the  term  indicates,  the  lumber  is  cut  less  than  its  designated 
size  in  the  first  instance.  Seasoning,  and  surfacing  or  planing,  still 
further  enlarge  the  discrepancy  between  the  actual  size  and  the  size 
by  which  the  lumber  is  known  and  sold. 

It  is  obvious  that  mills  which  cut  and  sell  full-size  stock  or  give 
the  trade  more  nearly  full-size  stock,  have  a  substantial  advantage  in 
competition  with  mills  which  cut  their  lumber  relatively  scant.  To 
remove  this  competitive  advantage  and  to  preserve  to  all  the  mills 
the  advantage  of  a  price  based  on  a  full-size  1,000  feet,  the  Western 
Pine  Manufacturers  Association,  as  well  as  other  lumber  manufac- 
turers' associations,  has  standardized  the  scant  measurements  to  which 
lumber  may  be  cut  as  it  comes  from  the  saw,  and  to  which  it  should 
be  finished  or  surfaced. 

In  1915  the  Nebraska  State  Legislature  was  considering  a  bill 
requiring  that  all  undressed  lumber  sold  in  the  State  must  "be  of 
full  length,  width,  and  thickness  of  the  dimension  for  which  it  is 
sold"  and  that  dressed  lumber  must  not  be  more  than  one-eighth 
inch  scant.  The  association  secretary  characterized  the  bill  as 
"  vicious,"  and  called  upon  the  members  to  prevent  its  passage. 

The  activities  of  the  association  since  the  armistice  illustrate  how 
much  (Jissension  may  arise  from  a  variation  in  thickness  on  certain 
stock  as  small  as  one  thirty-second  of  an  inch  and  the  methods  used 
to  penalize  the  manufacture  of  the  thicker  stock.  The  official  min- 
utes of  the  association  meeting  held  on  November  21,  1918,  contain 
the  following: 

It  was  brought  out  by  Mr.  Irwin  that  some  members  were  not  adhering 
strictly  to  the  standard  manufactured  sizes  adopted  by  the  Association.  Mr. 
Keys  admitted  that  his  firm  was  selling  stock  13/16"  when  so  ordered.  Mr. 
McCann  said  that  his  firm  was  doing  the  same  but  making  extra  charge  for 
the  additional  thickness.  This  brought  about  a  good  deal  of  discussion  on 
the  question  and  it  was  pointed  out  that  some  lee-way  must  be  allowed  for 
meeting  requirements  for  thicker  stock.  It  was  moved  that  an  extra  charge 
equivalent  to  the  extra  charge  for  rough  lumber  be  made  for  anything  surfaced 
thicker  than  standard. 

After  discussing  this  move  a  vote  was  taken  showing  a  pretty  even  division 
of  opinion.  The  Chair  pointed  out  that  unanimity  was  desirable  and  that 
the  subject  should  be  re-opened.  After  discussion  it  was  moved  that  two 
dollars  extra  be  charged  for  any  stock  surfaced  thicker  than  standard  to  be 
run  hit  or  miss.  The  motion  was  carried.  Mr.  McCann  stated,  however,  that 


124          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

he  would  abide  by  the  motion  provided  the  inspectors  inspected  the  standard 
thickness  at  all  mills. 

Secretary  Cooper  issued  an  official  circular  on  November  25  in 
which  it  was  stated: 

Our  meeting  at  Spokane  last  week  recommends  to  all  members  a  differential 
in  price  on  any  stock  run  thicker  than  our  standard  thickness  of  25/32,  the 
differential  being  $2.00  a  thousand  for  any  stock  run  thicker  than  standard, 
hit  or  miss. 

The  claim  that  the  sale  of  stock  larger  than  the  standard  size  was 
equivalent  to  price  cutting,  appears  in  a  letter  of  November  29 ,  from 
R.  E.  Irwin,  of  the  Boise-Pay ette  Lumber  Co.,  to  I.  N.  Tate,  of 
the  Weyerhaeuser  Sales  Co.  Referring  to  the  'Spokane  meeting  of 
November  21,  Mr.  Irwin  said: 

I  also  advised  them  that  we  had  run  up  against  competition  where  other 
concerns  were  furnishing  stock  full  ten  and  twelve  inches  wide  and  13/16" 
thick  and  that  we  consider  this  just  exactly  the  same  as  though  they  had 
cut  the  price — in  fact,  we  would  prefer  to  cut  the  price  rather  than  do  this. 

Mr.  Irwin  said  further : 

A  resolution  was  passed  at  that  meeting  that  they  would  consider  it  advisable 
to  ask  $2.00  per  thousand  more  for  any  stock  that  was  surfaced  thicker  than 
the  standard.  The  writer's  contention  was  that,  if  we  had  a  standard  of  25/32" 
thickness,  we  should  live  up  to  it  and  that  no  amount  of  money  that  could  be 
gotten  for  stock  surfaced  to  13/16"  would  pay — as  one  would  have  to  cut 
his  entire  lumber  thick  enough  to  surface  13/16"  and  the  relatively  small 
amount  that  we  would  sell  as  13/16"  would  mean  that  we  should  get  an  enor- 
mous price  for  this  in  order  to  offset  the  great  loss  in  over-run.  I  think,  how- 
ever, this  $2.00  charge,  if  it  is  followed,  will  eliminate  the  demand  for  13/16" 
and  practically  everyone  at  the  meeting  said  that  the  demand  for  this  thickness 
has  been  growing  less  all  the  time.  Most  of  them  felt  that  if  we  would  stick 
by  our  standard  of  25/32",  this  trouble  would  end,  as  there  would  be  a  lessen- 
ing demand  for  the  13/16"  stock. 

Replying  to  Mr.  Irwin  on  December  3,  L.  S.  Case,  manager  of  the 
Weyerhaeuser  Sales  Co.,  said: 

I  agree  with  you  that  it  would  be  better  to  cut  the  price  several  dollars  a 
thousand  than  get  away  from  the  25/32nds  standard. 

The  status  of  scant  sawing  in  May,  1919,  may  be  judged  from  the 
following  extract  from  the  official  minutes  of  the  meeting  held  on 
May  2  and  3  : 

The  question  of  standard  manufacturing  sizes  was  brought  up  for  discussion. 
This  discussion  showed  a  general  adherence  to  the  standard  association  thick- 
ness of  25/32  S2S. 

It  developed  that  there  has  recently  been  a  decided  difference  between  the 
various  mills  as  to  standard  widths,  many  mills  reporting  that  they  have  been 
manufacturing  their  lumber  1/4  inch  scant  instead  of  the  association  standard 
of  1/2  inch  scant. 

After  thorough  discussion  the  members  went  on  record  as  agreeing  to  adhere 
to  the  association  standards  as  follows :  All  inch  lumber  to  be  25/32  S2S.  Any 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          125 

lumber  S2S  hit  or  miss  to  13/16  will  be  $2  above  the  price  of  25/32.    All  widths 
S4S  will  be  1/2"  scant. 

In  a  letter  of  May  19  to  the  Blackwell-Panhandle  sales  office  the 
Craig  Mountain  Lumber  Co.  stated: 

We  mailed  you  copy  of  instructions  to  our  salesmen  as  to  prices  and  have  also 
issued  instructions  that  all  stock  S4S  will  be  1/2"  scant. 

At  the  bottom  of  the  letter  was  the  following  note : 

The  S4S  to  1/2"  on  common  is  a  big  mistake — it  means  all — will  be  S2S  only 
and  we  lose  1.00  per  M  on  weight  besides  shipping  a  less  desirable  board. 

F.  W.  Lewis,  sales  manager  of  the  Blackwell  &  Panhandle  sales 
office,  on  May  27  replied  as  follows : 

We  have  yours  of  the  19th,  with  reference  to  your  working  sizes  on  stock  and 
we  absolutely  agree  with  you  in  every  way  that  working  stock  to  1/2"  is  a 
great  big  mistake  and  it  is  going  to  force  our  trade  to  take  two  sided  stock 
instead  of  4  sided  stock,  and  when  you  stop  to  think  that  a  great  many  of  us 
have  been  practically  forcing  the  trade  for  the -last  four  years  to  take  4  sided 
stock  instead  of  2  sided  and  have  gotten  them  where  they  are  willing  to  take  it 
and  now  turn  around  and  force  them  to  take  2  sided  stock,  we  are  going  to  lose 
trade  by  it. 

The  writer  does  not  like  it  and  has  always  fought  it  and  I  am  afraid  always 
will  fight  it,  but  that  is  not  here  or  there,  but  we  are  up  against  it  and  we  have 
got  to  ship  4  sided  to  1/2"  scant  or  2  sides. 

The  foregoing  quotations  demonstrate  that  individual  initiative 
had  been  surrendered  in  deference  to  association  decision  on  the 
subject  and  competition  on  this  basis  effectively  checked. 

Writing  on  May  15,  the  Blackwell-Panhandle  sales  office  stated: 

For  your  information  will  say  that  Rose  Lake,  Milwaukee  Land,  McGoldrick 
and  all  other  White  Pine  mills  with  the  exception  of  the  Milwaukee  Lumber 
Company  and  the  Dalkena  Lumber  Company  are  making  their  stock  1/2" 
scant  in  width,  that  is  S4S  stock.  However,  they  will  accept  orders  the  same 
as  ever  for  S2S  stock. 

It  is  quite  impossible  for  me  to  go  into  detail  and  explain  to  you  how  and 
why  these  sizes  were  put  into  effect,  but  it  is  something  which  we  could  not 
avoid  and  I  am  very  frank  to  admit  that  I  am  opposed  to  the  1/2"  scant 
in  width,  but  I  am  really  powerless  to  do'  anything  without  causing  much 
greater  damage  to  everybody  concerned,  than  it  will  be  to  go  by  these  sizes. 

On  July  26,  W.  C.  Geddes,  of  the  Oregon  Lumber  Co.,  wrote  David 
C.  Eccles,  of  the  same  company,  in  part  as  follows : 

On  manufactured  sizes  (a  question  which  always  comes  up)  you  recall 
this  matter  on  widths  has  always  caused  trouble.  At  Spokane  meeting  many 
who  had  been  working  on  1/4  off  in  width  agreed  to  go  to  the  1/2  off  or 
association  standard.  On  Eastern  business  your  position  was  that  where 
customer  had  to  have  it  1/4  off  we  would  furnish  this  way.  Would  like  to 
have  your  advice  if  we  are  to  hold  to  this  regardless  of  position  of  other 
mills  should  it  come  up.  If  in  your  judgment  we  should  change  to  1/2  off 
now  is  the  best  time  to  put  it  over.  You  understand  Spokane  meeting  agreed 
to  do  this  absolutely  if  some  of  Western  Pine  and  two  or  three  White  Pine 
operators  would  agree  to  do  so,  which  was  finally  agreed  to.  We  have  had 


126  LUMBER   MANUFACTURERS '   TRADE   ASSOCIATIONS. 

but  very  few  orders  since  specifying  1/4  off,  although  a  few,  and  have  had 
several  in  which  customers  have  agreed  to  standard  or  1/2  off.  On  5/4  and 
6/4  Shop  you  know  we  are  surfacing  1/32"  heavier  than  Association  standard. 
This,  however,  may  not  come  up.  Our  trouble  as  you  know  without  any 
comment,  I  believe  your  position  has  been  that  we  would  not  have  two  stand- 
ards of  dressing  and  for  several  years  we  have  had  one  standard  on  Shop. 
With  the  exception  of  the  width  on  common  (on  very  few  orders)  and  the 
thickness  on  shop,  our  standards  are  100%  Association  standards. 

The  standardization  of  scant  sawing  is  particularly  difficult  for 
competitors  to  maintain  in  the  face  of  advanced  freight  rates  and  a 
weak  demand.  So  the  matter  of  scant  sawing  and  standard  sizes 
came  up  again  at  the  August,  1921,  meeting  of  the  association. 
The  following  extracts  from  the  American  Lumberman  indicate 
the  nature  of  the  issue  involved  and  the  concerted  action  taken  to 
remove  the  competitive  tendency  to  sell  stock  sawed  less  scant  than 
the  association  standard: 

A.  W.  Laird,  Potlatch,  explained  the  position  of  his  company.  He  stated 
that  it  has  stood  pat  on  the  present  standard  sizes  and  lost  much  business 
to  other  mills  that  were  making  a  concession  to  buyers  and  a  talking  point 
for  wholesalers  in  shipping  oversized  lumber;  namely,  l  inch  scant  in  sur- 
faced four  sides  stock.  Mr.  Laird  stated  that  his  company  would  continue 
to  manufacture  its  lumber  on  the  standard  sizes. 

During  the  discussion  it  was  claimed  by  several  speakers  that  upon  careful 
examination  they  had  found  there  was  no  real  demand  for  the  wider  stock 
by  the  consumers  or  the  retail  yards  but  that  the  odd  size  was  being  used 
as  a  talking  point  by  wholesalers.  Naturally  the  buyers  would  take  the 
larger  size  if  offered  it  at  the  same  price. 

The  committee  to  which  the  matter  was  referred  reported  as 
follows : 

We  recommend  that  the  association  reaffirm  the  present  standard  sizes  as 
already  adopted  by  it. 

We  recommend  that  there  be  an  addition  made  to  the  general  note  on 
the  association  price  list  providing  for  an  additional  charge  of  $2  per  M. 
for  any  stock  worked  wider  than  standard  widths. 

We  recommend  that  there  be  an.  additional  charge  of  $2  per  thousand 
extra  for  any  stock  SIS  or  S2S  No.  3  or  better,  shipped  east  of  Chicago. 

We  recommend  the  adoption  of  this  report  by  a  roll  call  vote  of  the  mem- 
bers present. 

The  further  action  taken  was  as  follows: 

Following  the  vote  which  settled  the  biggest  question  of  dispute  and  at  the 
suggestion  of  J.  P.  McGoldrick,  committees  from  the  different  districts  were 
appointed  to  secure  the  co-operation  of  all  members  not  represented  at  th^ 
meeting. 

The  settlement  of  this  much  disputed  question  brought  a  feeling  of  relief  to 
the  members  present.  A  better  feeling  pervaded  the  atmosphere  and  President 
Polleys  took  occasion  to  compliment  the  men  upon  the  splendid  spirit  shown  in 
the  energtic  way  they  planned  to  follow  their  decision. 

Again,  in  October,  1921,  the  subject  came  before  the  association  at 
a  special  meeting,  for  the  purpose  of  clearing  up  some  lack  of  under- 


LUMBER   MANUFACTURERS  '    TRADE   ASSOCIATIONS.  127 

standing  on  details.     The  American  Lumberman  described  the  action 
of  the  meeting  as  follows : 

However,  a  solution  which  is  undoubtedly  the  nearest  the  wishes  of  all,  was 
eventually  worked  out  and  the  following  resolution,  originally  put  by  J.  P. 
McGoldrick,  McGoldrick  Lumber  Co.,  Spokane,  and  many  times  amended  by 
different  members,  was  unanimously  passed : 

"All  lumber  4/4  and  thicker,  4  to  12  inches  inclusive,  No.  3  common  and  better, 
S4S  or  hit  or  miss  to  1/4-inch  scant  of  full  width,  shall  take  an  extra  charge 
of  $2. 

"  In  the  territory  east  of  Chicago  all  Idaho  white  pine,  4/4  and  thicker  Nos. 
1,  2  and  3  common,  4  to  12  inches  inclusive,  and  all  western  pine,  4/4  and 
thicker,  Nos.  1  and  2  common,  when  SIS  or  S2S,  shall  take  an  additional  charge 
of  $2." 

On  a  motion  of  E.  H.  VanOstrand,  Craig  Mountain  Lumber  Co.,  Winchester, 
Idaho,  the  footnote  to  the  basis  list,  making  an  extra  charge  of  $1.50  a  thousand 
for  resawing  boards,  was  eliminated. 

A  motion  also  prevailed  that  the  committee  prepare  new  basis  lists  for  ter- 
ritories east  of  Chicago  and  west  of  Chicago  which  will  conform  with  recent 
rulings  in  standardization  of  sizes. 

The  close  relation  between  scant  sawing  and  prices  is  clearly 
brought  out  in  the  foregoing,  as  well  as  the  fact  that  the  association 
has  continued  to  deal  with  the  subject  of  prices  in  the  same  bold  and 
open  manner  as  before  the  Federal  Trade  Commission's  investigation 
was  commenced. 

RELATION  BETWEEN  ASSOCIATION'S  PRICE  FIXING  ACTIVITIES 
AND  UNIFORM  DISCOUNTS  TO  AND  DISCRIMINATORY  CLASSI- 
FICATION OF  WHOLESALE  TRADE. 

The  larger  lumber  manufacturers  dispose  of  the  bulk  of  their 
product  direct  to  the  retailer,  but  the  smaller  manufacturers  are  de- 
pendent entirely  on  the  wholesaler,  broker  and  commission  men  for 
an  outlet.  Even  the  larger  manufacturers  occasionally  make  use  of 
the  wholesaler's  facilities  of  distribution,  particularly  east  of  Chicago. 
This  divergence  in  the  policy  of  the  manufacturers  gives  rise  to  com- 
petitive problems  involving  the  wholesaler's  discount  from  the  pub- 
lished lists  of  prices  to  retailers  and  the  right  of  particular  concerns 
to  recognition  as  wholesalers  and  to  receive  corresponding  discounts. 
The  solution  of  these  problems  has  been  undertaken  by  the  Western 
Pine  Manufacturers  Association. 

The  semiannual  meeting  of  August  14  and  15,  1918,  decided  on 
some  changes  in  the  commission  to  be  paid  to  wholesalers.  The 
minutes  of  the  meeting  recorded  the  action  of  the  association  as 
follows : 

The  next  subject  under  discussion  was  the  question  of  compensation  to  Com- 
mission men  and  Wholesalers.  The  Chair  pointed  out  that  the  cost  of  selling 
lumber  had  greatly  increased  and  that  the  present  recommended  rates  were  not 
sufficient.  This  caused  a  good  deal  of  discussion  which  finally  resulted  in  a 


128          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

motion  that  the  present  rate  of  compensation  be  increased  50%  to  all.  This  was 
seconded  and  carried  as  applying  to  the  territory  to  Chicago  and  westward. 
This  increases  the  compensation  to  75^  on  No.  3  and  poorer  and  $1.50  on  No.  2 
and  Btr.  to  wholesalers  and  7o<4  per  m  on  all  items  to  commission  men. 

On  December  27,  1918,  Secretary  Cooper  issued  a  bulletin  to  his 
members  reading  in  part  as  follows : 

I  find  that  there  is  still  possibly' some  misunderstanding  of  what  it  is  custom- 
ary to  allow  in  the  way  of  commissions  to  wholesalers  and  others.  Some  years 
ago  the  Association  defined  a  wholesaler  as  a  man  engaged  in  the  selling  of  lum- 
ber who  maintained  an  office  and  selling  organization  and  who  carried  the  ac- 
count. In  the  case  of  the  wholesaler  it  is  quite  generally  customary  now  to 
allow  him  a  reduction  in  price  of  $1.50  on  all  items  of  #2  common  and  better, 
$1.00  per  thousand  on  all  items  of  #3  common  and  poorer  and  20^'  on  lath. 

A  commission  man  is  a  man  who  does  not  carry  the  account,  but  who  sells  for 
various  firms  on  a  commission  basis.  It  is  customary  to  allow  a  commission 
man  75^  commission  on  all  lumber  and  15^  on  lath. 

While  we  have  never  fully  defined  this,  there  is  really  a  third  class  which 
might  be  distinguished  from  what  we  have  called  a  commission  man  by  calling 
the  commission  man  a  commission  merchant,  and  the  third  class  a  commission 
salesman.  He  is  the  salesman  who  works  exclusively  for  a  single  firm  and  sells 
on  a  commission  basis  rather  than  on  salary. 

Tfee  importance  of  preserving  the  distinctions  above  outlined  was 
then  touched  upon  by  the  secretary : 

We  believe  it  is  well  to  keep  these  distinctions  and  these  customs  well  in  mind 
as  deviations  from  them  are  apt  to  be  taken  as  price  cutting,  which  is  most 
disastrous  at  present. 

It  was  believed  that  certain  wholesalers  were  splitting  their  con- 
cession with  the  line  yard  retailers  and  thereby  cutting  under  the 
manufacturer.  Writing  from  Minneapolis  on  February  14,  1919,  to 
J.  P.  McGoldrick,  F.  W.  Lewis,  of  the  Blackwell-Panhandle  sales 
office,  said  in  that  connection : 

I  think  the  very  best  way  to  eliminate  this  evil  is  for  us  to  do  just  what  we 
started  out  to  do  at  our  meeting  in  Spokane,  and  that  is,  list  our  wholesalers  and 
when  any  one  of  us  find  out  that  a  wholesaler  is  not  maintaining  our  price 
in  the  territory,  cut  him  off  the  list  and  refuse  to  sell  him  any  stock.  I  think 
in  this  way  we  will  very  soon  eliminate  a  lot  of  the  bad  wholesalers  by  the  art 
of  putting  them  out  of  business  or  making  them  be  good  wholesalers. 

From  my  viewpoint  the  one  thing  to  do  is  to  educate  our  mills  to  know  their 
wholesalers.  A  price  cutting  wholesaler  is  just  as  bad  as  a  renegade  mill,  and  we 
want  to  try  and  fix  it  so  the  price  cutting  wholesaler  cannot  get  a  good  mill's 
stock. 

The  matter  was  also  discussed  at  the  association's  annual  meeting- 
early  in  February,  1919.  The  official  minutes  contain  the  following : 

The  matter  of  discount  that  members  were  allowing  to  wholesalers  was  dis- 
cussed freely.  It  was  stated  that  some  wholesalers  split  their  commissions  with 
the  trade  which  tended  to  demoralize  the  market.  After  a  very  lengthy  discus- 
sion, it  was  moved  by  Mr.  McGoldrick  that  the  members  should  all  send  a  list 
of  their  wholesale  and  commission  representatives  to  the  secretary's  office  and; 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          129 

that  this  would  be  valuable  information  and  should  be  available  to  all  members. 
This  motion  was  seconded  and  carried. 

When  the  lists  were  submitted,  it  developed  that  some  of  the  mills 
had  been  giving  certain  large  retailers  or  line  yard  concerns  the  ad- 
vantage of  the  wholesale  price.  David  C.  Eccles,  of  the  Oregon  Lum- 
ber Co.,  criticized  this  policy  in  a  letter  to  Secretary  Cooper  on  March 
27,  reading  in  part  as  follows : 

Have  hurriedly  gone  over  the  list  of  sales  connections  as  submitted  by  the 
several  mills  of  the  Association  and  it  is  very  apparent  why  there  has  been: 
some  misunderstanding  as  to  business  with  line  yards,  as  I  notice  in  the  list 
of  wholesale  connections  there  are  a  number  of  people  who  are  line  yard  con- 
cerns and  they  are  so  recognized  by  a  number  of  the  mills.  It  occurs  to  us 
that  if  there  is  not  some  step  taken  in  the  direction  of  defining  just  what  con- 
stituted a  wholesaler  with  the  information  that  has  been  put  out,  it  will  only 
be  a  matter  of  a  short  time  until  all  line  yard  buyers  will  be  included  in  the 
same  catalog. 

Mr.  Eccles  then  pointed  out  the  tendency  of  this  policy  "  to  upset 
market  conditions,"  stating: 

We  think  that  there  is  an  opportunity  of  eliminating  a  good  deal  of  the 
trouble  that  has  at  different  times  had  a  tendency  to  upset  market  conditions, 
and  while  it  is  not  our  prerogative  what  the  directors  of  the  association  should 
do,  it  does  look  as  though  an  early  meeting  is  justified  and  such  conditions 
as  now  exist  that  are  apt  to'  upset  the  market  should  be  remedied.  If  one 
line  yard  is  to  be  recognized  as  wholesalers,  let  us  give  all  mills  the  same  op- 
portunity with  all  line  yard  concerns  as  it  is  not  fair  to  us  who  have  salaried 
men  in  the  field  to  be  handicapped  to  the  extent  of  the  commission  which  cer- 
tain line  yard  dealers  are  receiving  from  some  of  the  Association  mills  and  this 
now  clears  up  certain  conditions  that  have  existed  with  dealers  from  Denver, 
east,  in  that  we  have  never  be.'ii  able  to  secure  from  them  any  of  their  de- 
sirable business,  always  being  given  to  understand  that  our  prices  were  high. 

Our  supposition  has  been  that  they  were  merely  trying  to  work  the  mills, 
but  is  evident  now  that  the  information  given  us  has  been  correct. 

The  matter  was  discussed  at  an  association  meeting  on  May  2  and 
3,  1919,  with  what  results  may  be  seen  from  the  following  extract 
from  a  letter  by  Mr.  W.  C.  Geddes,  of  the  Oregon  Lumber  Co.,  to 
Mr.  Eccles,  under  date  of  May  6 : 

Practically  all  of  the  old  troubles  were  gone  into.  It  was  brought  out  that 
many  of  the  mills  were  selling  to  wholesalers  at  such  a  price  that  they  could 
make  a  cut  to  the  trade,  particularly,  the  desirable  trade  and  take  the  business 
away  from  the  mills  who  would  not  allow  this  concession  to  wholesalers  and 
who  did  not  list  line  yards  as  their  wholesaler.  We  found,  that  is,  the  Boise 
Payette  and  ourselves,  that  a  lot  of  the  Inland  Empire  mills  were  doing  this 
very  thing  and  it  was  cutting  ourselves  and  them  out  of  business,  which,  of 
course,  I  need  not  explain  to  you  as  you  are  thoroughly  acquainted  with  it  and 
I  showed  Mr.  Barton  your  wire  to  me  there  and  he  called  me  into  a  conference 
after  the  first  session  was  over  and  stated  to  me  that  we  were  the  only  ones 
that  he  could  work  with  and  that  he  wanted  to  know  what  we  thought  of  our 
meeting  this  condition  with  line  yard  concerns,  and  I  told  him  just  how  I  felt 
in  the  matter  and  that  you  felt  the  same  way  as  you  had  so  expressed  it  to  me 


130  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

and  desired  me  to  take  these  matters  up.  We  decided  that  it  was  useless  to 
attempt  to  get  the  mills  to  cut  out  connections  that  they  had  made  and  that  the 
only  thing  we  could  do  was  to  meet  this  condition  with  line  yard  buyers  when 
we  saw  tit.  I  wired  you  to  this  effect  care  of  the  Biltmore  Hotel,  New  York, 
further  advising  you  that  I  had  also  wired  the  different  offices  tliat  to  such  con- 
cerns as  Green  Bay  and  other  yards  of  this  character,  they  were  authorized  to 
make  the  wholesale  price  to. 

Mr.  Geddes  also  brought  out  the  current  understanding  that  whole- 
salers were  not  to  be  allowed  any  concession  on  the  prices  of  "  shop 
lumber."  Mr.  Geddes  stated  in  that  connection : 

Another  matter  that  came  up  was  the  allowing  of  the  wholesaler  a  discount 
on  shop,  and  those  who  had  been  in  the  habit  of  doing  this  were  hit  a  pretty 
hard  rap  over  the  head  of  the  President  of  the  Association,  as  well  as  other 
members,  particularly  Mr.  Van  Ostrand. 

After  describing  the  discussion  concerning  concessions  made  to 
wholesalers  on  "  shop,"  Mr.  Geddes  continued : 

It  was  pointed  out  that  this  action  on  the  part  of  mills  selling  to  the  whole- 
saler in  this  way  permitted  the  break  in  the  shop  market  and  was  contrary 
to  the  understanding  because  it  was  distinctly  understood  that  the  shop  prices 
were  to  the  wholesaler  net  and  to  the  factory  and  large  users  the  same  price, 
and  was  done  with  the  view  of  doing  away  with  the  breaking  of  the  shop  prices 
by  the  wholesaler  and  it  was  pointed  out  that  even  a  sale  of  500,000  made  in 
this  manner  may  be  the  means  of  causing  the  serious  break  and  it  is  a  fact 
as  the  instance  related  illustrates  that  where  the  Nibley  Mimnaugh  come  in 
competition  with  the  wholesaler  and  the  wholesaler  guaranteeing  Eastern 
Oregon  stock,  they  met  the  prices  and  this  might  have  been  the  means  of 
starting  the  thing  downward  and  if  it  starts,  it  is  a  mighty  hard  thing  to  stop. 

Following  the  meeting  of  May  2  and  3  steps  were  taken  to  secure 
new  lists  of  wholesalers  and  commission  men  from  the  members,  with 
a  view  to  its  revision  by  the  board  of  directors.  The  secretary  was 
cautioned,  however,  that  "  it  would  be  well  for  you  to  consult  the 
association  attorney  as  to  how  far  the  association  can  proceed  in 
classifying  and  eliminating." 

The  further  history  of  this  matter  is  not  known,  but  the  fact  re- 
mains that  certain  powerful  retail  concerns  were  being  accorded 
wholesale  prices,  and  that  in  the  minds  of  influential  members  of  the 
association  this  was  unfair  to  less  favored  retailers,  as  well  as  fraught 
with  possibilities  of  price  cutting  among  the  manufacturers. 

OPEN    PRICE    FEATURES    OF   WESTERN    PINE    MANUFACTURERS' 
ASSOCIATION  METHODS. 

Open  price  associations,  so  called,  are  supposed  to  confine  them- 
selves to  a  mere  exchange  of  information  as  to  prices  actually  received 
on  closed  transactions,  and  carefully  to  refrain  from  any  attempt 
to  anticipate  or  establish  a  future  market  price.  The  sharp  distinc- 
tion between  associations  so  conducted  and  the  Western  Pine  Manu- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  131 

facturers'  Association  is  brought  out  by  the  fact  that  the  latter  or- 
ganization has  its  open  price  features,  like  other  lumber  associations, 
but  that  these  features  merely  supplement  the  main  purpose  of  estab- 
lishing a  uniform  price  as  a  guide  to  concerted  future  action.  The 
value  of  reports  on  prices  actually  received  in  judging  the  reaction 
of  the  market  to  the  tentative  prices  established  by  agreement  is 
readily  apparent. 

Writing  on  December  9,  1918,  to  a  Montana  manufacturer,  Secre- 
tary Cooper  gave  a  detailed  description  of  the  association's  informa- 
tion bureau,  to  which  the  members  report  their  sales.  He  paid  it 
the  following  tribute: 

The  Information  Bureau  has  been  a  very  great  success  I  should  say,  as  it 
has  been  a  strong  factor  in  stabilizing  the  market.  Prior  to  its  existence,  wo 
did  business  on  the  basis  of  rumor.  Our  market  Information  was  very  largely 
obtained  from  our  customers  or  prospective  customers  who  were  not  exactly 
impartial  sources  of  information.  The  Information  Bureau  from  the  beginning 
gave  us  exact  information  and  eliminated  hear-say.  It  has  had  a  markedly 
strengthening  effect  on  the  market  at  times  when  temporary  conditions  might 
have  tended  to  weaken  it. 

He  then  showed  the  natural  limitations  of  the  open  price  plan  by 
stating : 

Markets,  you  will  recognize,  are  not  made  by  information  as  to  what  people 
are  selling  for  entirely  and  when  conditions  are  right  our  market  goes  down 
or  goes  up  regardless  of  the  Information  Bureau  reports,  but  it  does  keep 
it  from  getting  demoralized  by  rumor  and  by  buyers  drives. 

The  way  the  information  bureau  is  used  to  check  up  the  execution 
of  the  agreements  reached  is  illustrated  by  the  following  extract 
from  a  letter  dated  August  7,  1918,  written  by  G.  E.  Stoddard,  of 
the  Grand  Eonde  Lumber  Co.,  to  R.  E.  Irwin,  of  the  Boise-Payette 
Lumber  Co. : 

What  do  you  hear  regarding  the  shop  market?  Since  putting  into  effect, 
the  prices  agreed  on  at  the  Baker  meeting,  a  few  weeks  ago,  we  haven't  seen 
a  single  sale  in  the  Bureau  reports  at  these  prices.  In  fact,  all  sales  up  to 
date  have  been  reported  at  the  old  prices,  plus  the  additional  for  advanced 
freight. 

Clapp  &  McCartney,  lawyers  of  St.  Paul,  Minn.,  and  attorneys  for 
the  Weyerhaeuser  interests,  were  of  the  opinion  that  the  information 
bureau  was  not  illegal  in  itself  but  that  it  was  dangerous  "  under 
the  circumstances."  Writing  on  December  2,  1919,  to  Secretary 
Cooper,  Mr.  Clapp  said  in  part : 

Almost  a  year  ago — last  spring— my  attention  was  called  in  some  way  to 
the  character  of  information  that  was  furnished  to  the  members  of  your 
Information  Bureau,  and  I  took  the  matter  up  both  with  the  Weyerhaeuser 
Companies  and  also  with  Mr.  Wetmore  and  Mr.  Carpenter  of  the  Shevlin 
Companies.  At  that  time  I  told  both  of  them  very  emphatically,  not  that  I 
thought  that  the  plan  of  the  Information  Bureau  in  and  of  itself  was  illegal, 


132  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

but  that  I  thought  that  under  the  circumstances  it  was  wholly  and  un- 
necessarily dangerous  and  therefore  unwise.  This  opinion  I  repeated  early  in 
August  to  the  Weyerhaeuser  Companies,  and  this  fall  it  has  been  approved 
by  what  they  call  their  "  Legal  Committee." 

Mr.  Clapp  went  on  to  express  his  doubts  that  the  plan  had  re- 
ceived governmental  approval  with  full  knowledge  of  the  facts  and 
criticized  the  furnishing  of  exact  copies  of  orders  instead  of  statistical 
compilations.  He  said  further : 

Now  I  repeat  that  it  is  not  the  work  of  the  Information  Bureau  taken  by 
itself  or  its  plan  that  seems  to  be  objectionable.  I  have  said  that  under  the 
circumstances  it  is  dangerous  and  further  than  this,  I  am  not  going  to  go, 
except  to  say  that  I  should  be  very  glad  to  talk  with  you  personally  or  with 
your  directors,  or  with 'any  one  or  more  of  your  members  about  the  propo- 
sition. 

COOPERATION  BETWEEN  WESTERN  PINE  MANUFACTURERS'  ASSO- 
CIATION AND  WEST  COAST  LUMBERMEN'S  ASSOCIATION. 

The  Federal  Trade  Commission's  report  on  the  West  Coast  Lum- 
bermen's Association,  issued  in  June,  1921,  attempted  only  incidental 
treatment  of  this  subject.  The  much  heavier  production  of  the  West 
Coast  region  gives  it  a  certain  degree  or  dominance  over  the  Inland 
Empire  in  setting  prices,  just  as  the  Southern  Pine  region  is  recog- 
nized as  the  natural  market  leader  of  the  West  Coast  for  the  same 
reason  and  also  because  it  is  better  located  with  regard  to  the  chief 
consuming  markets.  Given  a  common  desire  to  secure  the  highest 
possible  prices,  an  exchange  of  information  between  the  members 
of  the  two  associations  is  all  that  is  necessary  to  bring  about  an 
effective  cooperation. 

On  February  29,  1916,  Secretary  Cooper  wrote  J.  P.  McGoldrick, 
one  of  the  prominent  members  of  the  Western  Pine  Association,  de- 
scribing the  advances  which  were  expected  to  be  made  at  a  meeting 
on  the  next  day.  He  stated  to  Mr.  McGoldrick,  who  was  in  Tacoma, 
Wash.,  at  the  time : 

Should  be  glad  to  have  you  wire  any  action  taken  by  the  coast  if  you  can  do 
so  in  time  to  be  of  help  here. 

Again,  in  November,  1916,  an  advance  in  price  by  the  Western 
Pine  Manufacturers'  Association  seemed  contingent  upon  an  advance 
by  the  West  Coast  Association.  A  letter  written  by  Mr.  E.  H.  Polleys 
to  Secretary  Cooper  on  November  13, 1916,  after  stating  that  business 
was  good  and  that  the  retail  trade  was  better  than  it  had  ever  been 
in  the  history  of  his  plant,  concluded  with  this  interrogatory  sug- 
gestion : 

What  is  the  prospect  of  a  raise  in  price  from  the  Coast  writhin  the  next  thirty 
days?  We  feel  that  there  should  be  a  general  advance,  both  from  the  Coast 
and  the  Inland  Empire  on  Common  Stock,  Dimension,  Timbers,  etc. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          133 

The  secretary  replied  on  November  15  in  part  as  follows : 

I  think  the  Coast  is  quite  in  a  humor  to  advance.  As  I  am  leaving  for 
Tacoma  tonight  I  hope  to  be  able  to  report  to  you  whether  there  will  be  an 
advance  in  the  near  future  or  not  after  my  return. 

On  November  18,  H.  G.  Miller,  a  member  of  the  executive  com- 
mittee of  the  Montana  association,  wrote  Secretary  Cooper  as  fol- 
lows : 

We  are  calling  a  meeting  for  Thursday  next,  at  Kalispell,  to  discuss  prices, 
in  view  of  changes  on  the  Coast,  which  we  understand  have  been  made,  but  we 
have  no  definite  advices  as  yet. 

Will  you  kindly  forward  to  me,  in  care  of  the  Association  here,  anything 
that  you  have  now,  with  reference  to  changes  in  the  conditions  of  fir,  and  also 
let  me  know  whether  any  changes  are  contemplated  by  the  Western  Pine  Manu- 
facturers Association. 

On  November  20  the  secretary  replied  to  Mr.  Miller  describing  the 
changes  made  by  the  West  Coast  Lumbermen's  Association  at  its 
meeting  at  Tacoma,  Wash.,  on  November  4.6,  17,  which  Mr.  Cooper 
apparently  attended.  The  letter  was  in  part  as  follows : 

Replying  to  yours  of  the  18th,  we  are  advised  that  the  Coast  Mills  have 
issued  discount  sheet  No.  14  which  carries  an  advance  of  $1.00  per  1000  on 
all  items  except  on  those  which  are  already  at  list. 

***•«!*** 

I  am  taking  up  by  telephone  today  the  question  of  Western  Pine  markets 
with  a  number  of  our  members  and  will  advise  you  if  there  are  any  changes. 

It  may  be  noted  here  that  a  new  concession  sheet  was  issued  by 
the  Montana  association  on  November  25th. 

On  October  20,  1917,  the  Potlatch  Lumber  Company,  one  of  the 
Weyerhaeuser  group,  wrote  Mr.  Hagenbuch,  of  the  Panhandle  Lum- 
ber Co.,  recommending  an  increase  of  prices,  and  stating: 

The  coast  is  way  ahead  of  us  now  on  their  #1  &  2  Clear  as  compared 
with  our  C  &  Better  Fir  &  Larch,  and  these  woods  also  should  be  gone  over 
and  straightened  up. 

The  maximum  prices  fixed  by  the  Government  on  Douglas  fir  in 
June,  1918,  gave  the  Inland  Empire  manufacturers  an  opportunity 
to  increase  their  prices  on  fir  and  larch  to  equal  those  embodied  in 
discount  sheet  No.  23,  of  the  West  Coast  Lumbermen's  Association. 
On  July  24  one  of  the  Montana  members,  Mr.  A.  G.  Naundorf ,  wrote 
Secretary  Becker  as  follows: 

We  wired  you  today  as  follows  in  answer  to  your  letter  of  the  23d : 
"  Mr.  Weil  away  prefer  not  to  make  the  trip  Saturday     I  suggest  you  attend 
the  meeting  for  the  Montana  mills  and  line  up  new  discounts  with  Coast  twenty 

three,  as  shown  in  my  recent  statement." 

*****  *  * 

Since  I  sent  statements  of  comparison  to  you,  Mr.  Paul  Lachmund,  and 
Cooper,  I  see  no  reason  why  you  could,  not  make  the  trip  for  all  the  Montana 


134  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Interests  and  insist  that  they  line  up  with  the  Coast  particularly  on  larch  and 
fir  common  boards  and  clear  larch  and  products  as  well  as  other  interested 
items. 

In  my  judgment  these  prices  should  be  exactly  the  same  as  the  Coast  and  not 
500  or  $1.00  under  the  Coast,  in  view  of  the  price  fixing  plans,  because  you 
appreciate  that  we  must  get  on  as  high  a  level  as  possible. 

As  shown  elsewhere,  Mr.  Naundorf  later  reported  that  this  had 
been  done.  (See  p.  102.) 

In  January,  1919,  the  lumber  market  was  hesitating  in  the  transi- 
tion from  war  to  peace  conditions,  and  the  manufacturers  were  con- 
certedly  endeavoring  to  hold  prices  firm  and  even  to  advance  them 
in  the  face  of  a  weak  demand. 

On  January  18  Mr.  J.  P.  McGoldrick,  of  the  McGoldrick  Lumber 
Co..  in  writing  to  Mr.  Ed.  R.  Hogg,  of  the  Atlas  Lumber  Co.,  a 
prominent  Douglas  fir  operator,  stated : 

Manufacturers  here  in  general  are  adhering  to  card  #2,  but  in  hopes  the 
Coast  will  see  not  only  the  error,  but  the  loss  in  their  ways  and  advance  prices 
not  over  $5.00  per  thousand  on  Common. 

On  February  10  Secretary  Cooper  issued  a  circular  containing 
the  following: 

We  are  advised  that  mills  in  our  territory  are  now  generally  quoting  fir 
and  larch  dimension  and  timbers  on  the  basis  of  Coast  list  and  discount 

#24. 

Beginning  in  April,  1919,  the  lumber  market  was  characterized 
by  numerous  and  radical  advances  put  into  effect  by  the  various 
organized  groups  of  manufacturers.  In  April  southern  pine  led  off 
with  an  advance.  On  May  1  the  West  Coast  Association  ad- 
vanced prices.  On  May  3  the  Western  Pine  Manufacturers'  Asso- 
ciation followed  suit  and  notified  the  West  Coast — as  indicated  by 
the  following: 

A  telegram  was  addressed  to  the  Western  Pine  Manufacturers'  As- 
sociation by  the  Oregon-Washington  Lumber  &  Manufacturing  Co. 
on  May  7,  as  follows: 

Wire  briefly  advance  prices  or  list  changes  adopted   Spokane.     Mail  card. 

A  reply  was  received  the  same  day  signed  by  A.  W.  Cooper,  who 
is  the  association  secretary  : 

Advance  fir  and  larch  lumber  three  and  better  common  and  Idaho  and 
Western  number  two  and  better  common  and  selects  one  dollar.  Pine  Lap  sid- 
ing fifty  cents.  Advance  fir  and  larch  dimension  timbers  and  selects  to  Coast 
card  twenty  five. 

About  May  5  the  southern  pine  manufacturers  advanced  and  noti- 
fied the  West  Coast  mills  of  their  action.  On  May  13  the  West  Coast 
again  advanced  and  issued  discount  sheet  No.  4  to  cover  the  advance. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  135 

On  May  23  C.  S.  Sanderson,  of  the  Milwaukee  Land  Co.,  wrote 
from  Seattle  to  Mr.  J.  P.  McGoldrick,  of  the  McGoldrick  Lumber 
Co.,  describing  conditions  and  prices  on  the  Pacific  coast,  and  stating : 

Their  opinion  is  that  at  your  meeting  Saturday  that  you  should  not  look  to 
the  coast  to  be  your  guiding  star  at  this  time  as  the  Southern  Pine  Mills  are 
over  anything  the  coast  has  tried  or  thought  of  yet. 

******* 

I  am  sending  you  some  discount  sheets  #4,  which  you  may  use  for  distribu- 
tion at  your  meeting. 

On  May  28, 1919,  the  sales  manager  of  the  St.  Paul  &  Tacoma  Lum- 
ber Co.,  of  Tacoma,  Wash.,  a  leading  fir  operator,  wrote  the  Craig 
Mountain  Lumber  Co.,  of  Craig  Mountain,  Idaho,  as  follows: 

We  acknowledge  your  letter  of  the  23d  and  note  that  you  expect  a  meeting 
in  Spokane  on  Saturday.  We  wired  you  today  as  per  copy  enclosed  and  con- 
firmed as  we  expect  to  attend  a  meeting  today  of  lumbermen  and  would  be 
glad  to  have  a  report  from  different  market  territories  with  reference  to  condi- 
tions. 

The  telegram  referred  to  read : 

Please  wire  immediately  result  of  Spokane  meeting  and  brief  report  market 
situation  Inland  Empire. 

On  the  same  day  the  Craig  Mountain  Lumber  Co.  replied  by  tele- 
gram as  follows : 

Western  Pine  advances  one,  two  and  three  common  and  D  Select  two  dollars, 
C  select  three  dollars,  B  and  Better  five,  D  siding  fifty  cents,  C  siding  one  fifty, 
B  siding  two  fifty,  Lath  fifty  cents,  battens  one  dollar,  fir  dimension  and  timbers 
five  dollars,  four  boards  two  dollars,  three  boards  four  dollars,  one  and  two 
boards  five  dollars,  selects  three  dollars,  white  fir  and  cedar  three  and  better 
two  dollars.  Understand  practically  all  mills  sold  out  on  fir  and  very  low  on 
all  items  of  pine  except  three  and  four  boards.  Demand  good  now  on  number 
three  and  inquiries  hoavy  on  four.  Disposition  general  not  to  book  any  volume 
in  advance. 

On  May  31  the  St.  Paul  &  Tacoma  Lumber  Co.  replied  as  follows : 

We  are  very  glad  indeed  to  get  your  wire  outlining  recent  advances  in  your 
market.  This  was  read  to  the  writer  over  the  telephone  at  the  lumbermen's 
meeting  Wednesday  afternoon  and  was  of  considerable  assistance  in  guiding 
the  opinion  of  those  present. 

The  fir  manufacturers  had  adopted  discount  sheet  5  as  the  result 
of  the  meeting  above  referred  to. 

F.  D.  Becker,  secretary  of  the  Montana  lumber  manufacturers,  on 
June  12  wrote  identical  letters  to  F.  W.  Lewis,  sales  manager  of  the 
Blackwell-Panhandle  sales  office,  and  to  Secretary  Cooper,  as  fol- 
lows: 

Inasmuch  as  Coast  Discount  #6  is  issued  advancing  timbers  $5.00  and  other 
items  $3.00  do  you  think  that  any  of  the  Inland  Empire  mills  will  advance 
their  prices  and  is  there  any  likelihood  of  their  being  a  meeting  held  soon  to 
discuss  market  conditions? 

91321°— 22 10 


136          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Mr.  Walker  Neils,  of  the  J.  Neils  Lumber  Co.,  on  June  16  wrote 
Mr.  F.  W.  Lewis  as  follows: 

I  understand  the  Coast  is  strong  on  Discount  #6.  Hadn't  we  better  get  in 
line?  I  would  suggest  a  meeting  in  Spokane,  Saturday  of  this  week. 

On  June  28,  1919,  a  telegram  was  sent  to  the  Weyerhaeuser  Sales 
Co.  at  St.  Paul,  Minn.,  and  signed  by  the  Weyerhaeuser  Sales  Co. 
office  at  Spokane,  which  read : 

Our  five  connections  here  also  Boise-Payette  instruct  effective  immediately 
advance  prices  all  items  Fir  and  Larch  Dimensions  and  Timbers  and  Selects 
to  Basis  Discount  six  Coast  Rail  B  List.  Advance  number  three  and  better 
common  Fir  and  Larch  Boards  one  dollar.  *  *  * 

As  shown  in  another  connection  (p.  106)  an  association  meeting 
on  June  27  had  made  these  advances  as  well  as  advances  on  other 
woods  not  directly  in  competition  with  coast  woods. 

During  the  latter  half  of  1919  the  runaway  market  made  it  possible 
for  the  western  pine  manufacturers  to  advance  their  prices  beyond 
those  of  the  coast  manufacturers.  As  shown  in  another  connection 
"(p.  107)  a  conference  of  sales  managers  held  jn  December  expressed 
the  opinion  that  dimension  should  be  advanced  $4  per  M  above  the 
coast  list.  On  February  19,  1920,  F.  W.  Lewis  wrote  Secretary 
Cooper,  stating  his  desire  to  see  "  prices  somewhat  standardized  if 
possible,"  and  further: 

This  district  started  out  a  year  ago  to  follow  the  Coast  and  we  have  not 
done  it,  but  that  was  hardly  to  be  wondered  at,  as  the  Coast  is  as  far  out  of 
line  as  we  are.  *  *  *  I  feel  that  members  of  the  Western  Pine  Manufac- 
turers have  been  extremely  lax  in  attending  meetings  in  the  last  several  months 
and  I  do  not"  think  we  have  had  meetings  enough.  While  everyone  is  asking 
the  price  he  figures  lumber  is  worth,  I  do  not  think  we  should  meet  with  refer- 
ence to  prices  any  more  than  we  have  in  the  past,  but  I  do  think  we  should 
have  meetings  a  little  oftener  and  discuss  the  situation  and  get  a  line  on  each 
other's  views. 

On  March  6,  1920,  which  was  after  the  announcement  by  the 
Weyerhaeusers  that  prices  would  be  reduced  and  guaranteed  against 
further  increase  for  several  months,  the  Blackwell-Panhandle  sales 
office  circularized  its  sales  connections  and  some  of  its  competitors, 
criticizing  the  Weyerhaeuser  policy  and  stating : 

I  understand  127  mills  on  the  W^est  Coast  are  holding  firm  on  prices,  and 
have  heard  of  no  one  cutting  prices  in  this  district.  As  soon  as  the  transit 
cars  which  the  Coast  Wholesalers  have  out  are  cleaned  up,  buying  will  be  very 
brisk,  as  the  Weyerhaeuser  interests  can  not  furnish  but  a  small  amount  of  the 
lumber  needed. 

COOPERATION  BETWEEN  WESTERN  PINE  MANUFACTURERS'  ASSO- 
CIATION AND  CALIFORNIA  AND  MINNESOTA  PINE  PRODUCERS. 

The  pine  lumber  produced  by  members  of  the  Western  Pine  Manu- 
facturers' Association  is  especially  adapted  for  use  in  the  manufac- 
ture of  the  finer  grades  of  sash  and  doors.  This  is  true  particularly 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          137 

of  the  Idaho  white  pine.  Other  woods  extensively  used  for  the  same 
purpose  are  the  white  and  sugar  pines  of  eastern  California  and  the 
northern  white  pine  of  Minnesota.  The  lumber  for  such  purposes  is 
cut  in  special  sizes  and  thicknesses  and  is  known  as  "  factory  "  or 
"  shop  "  lumber. 

The  Weyerhaeuser  interests  are  the  dominant  influence  in  the  pro- 
duction of  both  Idaho  and  Minnesota  white  pine,  but  the  Shevlin- 
Carpenter  interests  are  also  important  factors  in  both  fields.  It  is 
apparent  that  the  price  policy  followed  in  one  region  may  be  quickly 
reflected  in  the  other,  under  such  circumstances,  if  the  parties  domi- 
nant in  timber  ownership  and  production  so  desire.  Thus,  on  July 
21, 1919,  T.  A.  McCann,  manager  of  the  Shevlin-Hixon  Co.,  of  Bend, 
Greg.,  wrote  the  Blackwell-Panhandle  sales  office,  a  competitor,  de- 
scribing advances  just  made  and  stating: 

This  is  identical  with  the  advances  made  by  Northern  Pine  interests  and  we 
have  applied  them  to  our  Western  Pine  also. 

The  relations  between  the  Western  Pine  Manufacturers'  Associa- 
tion and  the  California  producers,  however,  are  more  typical  of  the 
cooperative  methods  of  lumber  manufacturers  of  different  groups, 
when  entering  common  markets.  The  California  white  and  sugar 
pine  manufacturers  have  three  organizations,  one  known  as  the  Cali- 
fornia White  &  Sugar  Pine  Manufacturers'  Association,  and  the 
others  the  California  Sugar  &  White  Pine  Co.  and  the  California 
Pine  Box  Distributors.  The  two  latter  are  cooperative  selling 
agencies. 

On  November  25,  1918,  Secretary  Cooper  circularized  the  members 
of  the  Western  Pine  Manufacturers'  Association,  advising  them  of 
the  current  market  prices  on  shop  lumber,  and  admitting  that  "  Cali- 
fornia, in  isolated  instances,  has  made  prices  somewhat  below  this." 

On  November  29,  1918,  R.  E.  Irwin,  of  the  Boise-Payette  Lumber 
Co.,  a  Weyerhaeuser  company,  wrote  I.  N.  Tate,  assistant  manager 
of  the  Weyerhaeuser  Sales  Co.,  describing  the  prices  recently  agreed 
upon  at  a  meeting  of  association  manufacturers,  and  adding : 

I  am  writing  practically  all  of  the  big  shop  producers  in  California  to  "  feel 
them  out "  and  see  what  they  think  of  the  shop  situation  and  am  also  advising 
them  what  our  prices  are  but  that  we  are  perfectly  willing  to  get  more. 

Early  in  January,  1919,  a  meeting  was  called  to  discuss  the  price  of 
shop  lumber.  On  January  6,  F.  W.  Lewis  wrote  Secretary  Cooper  in 
part  as  follows : 

However,  I  have  a  few  things  I  would  like  to  mention  with  reference  to  price 
on  Shop  lumber.  While  I  am  thoroughly  convinced  that  low  grade  Shop  is  far 
too  low  as  compared  with  No.  3  and  No.  4  Boards.  However,  the  question  arises, 
are  we  going  to  be  able  to  maintain  the  present  values  of  No.  3  &  No.  4  Western 
Pine?  A  number  of  our  neighbors,  as  you  know,  for  some  time  have  been  selling 
these  Boards  at  from  $1.00  to  $2.00  off  card  and  the  question  is,  are  they  going 


138          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

to  get  into  the  harness  with  the  rest  of  us  and  all  pull  together  and  quote  what- 
ever price  is  decided  we  should  ask  for  Shop.  I  wish  they  would  thoroughly 
make  up  their  minds  to  absolutely  stick  for  that  price.  From  all  indications, 
the  large  factories  in  the  East  are  going  to  place  their  Shop  orders  within  the 
next  four  or  six  weeks,  and  there  is  no  doubt  but  with  the  prices  that  the  Cali- 
fornia people  are  now  asking  we  can  at  least  get  our  present  asking  price  on 
Shop  or  possibly  a  trifle  more. 

Prices  on  shop  lumber  were  advanced  at  a  meeting  held  on  January 
7.  California  producers  were  represented  at  this  meeting. 

Mr.  C.  R.  Wisdom,  of  the  Red  River  Lumber  Co.,  San  Francisco, 
Calif.,  in  a  letter  to  Mr.  R.  E.  Irwin,  of  the  Boise-Payette  Lumber 
Co.,  dated  July  3,  1919,  refers  to  what  probably  was  this  meeting  in 
the  following  language : 

No  doubt  you  recall  the  conference  we  had  in  Portland  last  January,  regard- 
ing factory  lumber  prices,  the  result  of  which  enhanced  our  values  considerably, 
and  our  Company.  Besides  the  writer  is  in  favor  of  conferences  of  this  nature. 

Mr.  R.  E.  Irwin,  sales  manager  of  the  Boise-Payette  Lumber  Co., 
one  of  the  Weyerhaeuser  companies,  on  June  16,  1919,  wrote  F.  F. 
Sayre,  of  the  California  Sugar  &  White  Pine  Lumber  Co.,  of  San 
Francisco,  the  selling  agency  of  the  California  pine  producers,  in 
part  as  follows : 

We  have  just  made  an  advance  on  practically  everything  on  our  list  with  the 
exception  of  shop,  and  just  as  soon  as  these  lists  are  out  of  the  printer's  hands, 
we  will  see  that  you  get  copies  of  same. 

The  California  company  replied  under  date  of  June  20,  stating  ii* 
part: 

We  note  that  you  have  not  advanced  your  prices  on  Shop.  California  is  very 
low  on  Shop  grades;  has  practically  nothing  in  White  Pine,  to  sell.  We  feel 
that  our  prices,  if  anything,  are  low. 

Believe  that  you  can  follow  the  advance  we  have  made  and  by  so  doing  move 
all  of  the  lumber  in  the  Shop  grades  there  are  for  sale. 

Would  be  very  glad  to  cooperate  with  you  in  every  way  and  discuss  all  matters 
of  mutual  interest,  to  a  full  and  complete  understanding. 

On  June  24  Mr.  Irwin,  the  Boise-Payette  Lumber  Co.'s  sales  man- 
ager, again  wrote  the  California  Sugar  &  White  Pine  Co.  this  rather 
frank  statement : 

I  have  spent  considerable  time  with  the  competing  mills  in  the  territory  try- 
ing to  get  the  shop  situation  lined  up.  We  would  have  had  no  trouble  in  get- 
ting a  very  much  better  price  for  shop  in  this  territory  this  spring,  as  we  had 
very  little  cut  ahead,  had  not  some  of  the  California  mills  quoted  as  low  as 
$39.50  on  the  Mississippi  River  for  shop ;  this  was  one  of  the  big  mills  in  your 
territory. 

I  have  written  several  letters  in  the  last  week  to  the  mills  in  our  local  terri- 
tory with  a  view  to  taking  up  with  the  manufacturers  in  California  and  seeing 
if  we  could  not  arrive  at  some  different  basis  of  marketing  shop. 

******* 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  139 

We  wish  to  assure  you  that  Boise-Payette  will  cooperate  in  every  way  with 
the  manufacturers  in  this  territory  and  California  with  a  view  to  obtaining 
better  results  and  better  prices  for  our  products. 

On  June  20  the  Boise-Payette  Lumber  Co.  wrote  the  Weyerhaeuser 
Sales  Co.  in  part  as  follows: 

There  is  a  movement  on  in  this  territory  to  try  to  get  an  advance  on 
shop  lumber.  This,  of  course,  will  not  affect  us  very  much  now. 

The  writer  has  spent  a  lot  of  time  trying  to  get  our  shop  up  to  the  present 
prices  and  found  on  his  trip  down  the  River  that  the  Red  River  people  had 
taken  lots  of  shop  business  from  that  territory  on  a  $39.00  basis  last  winter, 
and  are  now  unable  to  deliver  it. 

The  California  people  really  make  the  price  on  shop  and  we  understand 
they  are  considerably  stronger  than  they  were  some  time  ago.  We  do  not 
think  there  is  any  question  but  what  a  $2.00  advance  on  shop  would  be  easily 
gotten  but  this,  of  course,  would  not  affect  us  at  the  present  time. 

Mr.  R.  E.  Irwin,  of  Boise-Payette  Lumber  Co.,  on  June  20  also 
wrote  T.  A.  McCann,  general  manager  of  the  Shevlin-Hixon  Co., 
and  who  also  was  president  of  the  Western  Pine  Manufacturers' 
Association,  regarding  an  advance  of  prices  on  shop  items  in  the 
following  language: 

We  had  a  visit  from  Mr.  Sayre,  but  I  was  away  when  he  was  here.  We 
have  also  had  some  correspondence  with  him  and  I  believe  the  time  is  ripe 
when  we  should  go  down  into  the  California  territory,  get  hold  of  such  people 
as  Sayre,  the  Red  River  people,  McCloud — etc.  and  I  think  we  could  revolu- 
tionize the  shop  business. 

Unquestionably,  shop  has  been  sold  cheaper  than  any  other  grade  of  lumber, 
considering  what  you  give  them.  From  information  which  I  think  is  authentic, 
I  could  tell  you  that  the  Red  River  people  last  year  sold  No.  2  shop  on  the 
Mississippi  River  at  a  $39.50  basis;  they  are  so  badly  oversold  that  they  are 
not  making  deliveries.  You  of  course  realize  that  these  people  are,  and  always 
have  been,  pretty  hard  to  hold  in  line.  I  would  be  glad  to  work  with  you, 
however,  with  the  California  people  and  believe  we  could  arrive  at  a  basis 
of  understanding  that  would  greatly  change  the  methods  of  handling  and 
selling  shop. 

The  Mr.  Sayre,  Red  River  people,  and  McCloud  referred  respec- 
tively to  F.  F.  Sayre  of  the  California  Sugar  &  White  Pine  Co., 
the  Red  River  Lumber  Co.,  and  the  McCloud  River  Lumber  Co., 
all  manufacturers  of  California  woods  and  not  members  of  this 
association.  Mr.  McCann  replied  to  Mr.  Irwin's  letter  on  June  23, 
stating : 

I  have  not  taken  up  with  the  Association  in  regard  to  the  Shop  proposition 
and  am  glad  to  get  your  information.  I  will  be  only  too  willing  to  accompany 
you  or  any  one  into  the  California  territory  in  order  to  get  this  Shop  matter 
on  the  right  basis.  You  know  we  have  been  working  to  have  a  joint  associa- 
tion so  that  although  it  is  not  one  with  identical  membership,  it  will  at  least 
be  on  an  affiliated  basis  between  the  Western  Pine  and  California  Pine. 

A  meeting  of  the  Western  Pine  Manufacturers  Association  was 
held  on  June  27,  and  prices  generally  advanced,  as  shown  elsewhere 


140          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

(p.  106).  The  action  of  the  meeting  with  regard  to  shop  lumber 
prices  and  their  relation  to  California  manufacturers  were  described 
by  T.  A.  McCann,  president  of  the  association,  in  a  letter  of  June 
30,  as  follows: 

We  did  put  4/4  Shop  up  $2.00;  No.  3  Shop  $1.00;  No.  2  &  Better  Shop  $2.00. 
This  leaves  it  on  identically  the  same  prices  as  the  last  market  sheet  from 
California,  so  that  it  was  arranged  for  a  Committee,  composed  mostly  of  mills 
who  have  Shop  contracts,  to  go  down  and  interview  the  California  men  with 
an  idea  of  getting  our  Shop  prices  somewhat  in  line  with  our  Common  prices, 
so  that  the  absurdity  under  which  we  are  now  operating  will  not  continue. 

Mr.  McCann  also  wrote  Mr.  McGavic,  of  the  McCloud  River  Lum- 
ber Co.,  McCloud,  Calif.,  with  a  view  to  arranging  a  joint  confer- 
ence between  committees  from  the  two  districts. 

Mr.  R.  E.  Irwin,  of  the  Boise-Payette  Lumber  Co.,  one  of  the 
Weyerhaeuser  companies,  wrote  the  McCloud  River  Lumber  Co.,  of 
McCloud,  Calif.,  on  June  30,  stating  in  part : 

I  have  just  returned  from  a  meeting  of  the  Western  Pine  Manufacturers 
Association  at  Spokane,  where  it  was  the  concensus  of  opinion  that  prices  on 
shop  lumber  should  be :  4/4  Shop,  $39.00 ;  5/4  and  6/4  Shop  No.  3,  $36.50 ;  No. 
2,  $42.50 ;  8/4  Shop  No.  3,  $37.50 ;  No.  2,  $42.50 ;  No.  1,  $52.50 ;  No.  1,  $56.50. 

It  will  be  remembered  that  Mr.  Irwin  on  June  21  and  June  23  had 
notified  two  California  companies  that  his  prices  on  shop  were  No.  1, 
$50.50;  No.  2,  $40.50;  No.  3,  $35.50,  on  a  57-cent  rate.  At  the  same 
time  Mr.  Irwin  also  wrote  J.  D.  Spaulding,  of  the  California  Sugar 
&  White  Pine  Co.,  making  an  almost  identical  statement.  On  the 
same  day  Mr.  Irwin  also  telegraphed  Mr.  Spaulding  as  follows : 

Inland  Empire  Shop  prices  have  advanced  to  following  basis  f.  o.  b.  Mississippi 
River  Points  five  and  six  quarter  thirty  six  fifty  forty  two  fifty  fifty  two  fifty 
one  dollar  spread  on  eight  quarter  three  four  dollars  spread  on  eight  quarter 
two  and  better. 

This  telegram  was  acknowledged  by  Mr.  Spaulding  in  a  letter 
dated  July  1. 

In  a  letter  written  July  15,  Mr.  Irwin  further  stated  to  Mr. 
Spaulding : 

Up  until  the  last  meeting  at  Spokane,  the  price  on  shop  was  $35.50,  $40.50  and 
$50.50.  This  was  the  market  on  Western  Pine  shop  and  most  of  our  shop  has 
been  sold  at  that  figure. 

At  the  last  meeting  in  Spokane,  the  price  was  advanced  as  per  my  wire  to 
you.  This  was,  in  the  opinion  of  most  of  those  present  at  the  meeting,  the 
market  on  shops  and  these  are  our  prices  at  this  time. 

On  July  8,  R.  E.  Irwin,  of  the  Boise-Payette  Lumber  Co.,  wrote 
L.  S.  Case,  of  the  Weyerhaeuser  Sales  Co.,  outlining  what  the  pro- 
posed conference  hoped  to  accomplish  in  the  following  language : 

I  have  been  appointed  chairman  of  a  committee  to  visit  the  California  mills 
and  I  am  arranging  with  Mr.  McGavic,  Mr.  Wisdom,  Mr.  Spaulding  and  the 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          141 

Weed  people  to  go  over  this  situation  with  them.  As  a  matter  of  fact,  they  are 
beginning  to  realize  that  we  are  real  competitors  of  theirs  in  shop  in  the  West- 
ern Pine  Market. 

What  I  am  anxious  to  do  is  to  get  this  spread  between  our  No.  2  and  No.  3, 
or  in  other  words :  Get  our  price  up  about  $2.00  higher  on  No.  2  shop  than  it  is 
at  present  and  have  the  same  spread  between  the  No.  2  and  the  No.  1  or  $10.00. 
While  this  would  not  particularly  affect  us  this  year,  we  believe  it  would  have 
a  very  beneficial  effect  on  the  shop  market.  Then,  we  could  all  cut  for  No.  2 
and  better  shop  and,  with  this  spread,  the  factories  would  not  complain  about 
taking  the  percentage  of  No.  3  that  we  would  get  from  the  fall  down  in  going 
through  our  kilns  and  shopping. 

There  is  also  some  discrepancy  between  our  prices  and  California  prices  on 
selects.  We  are  lower  in  some  instances  and  higher  in  others.  These  should 
be  evened  up. 

We  all  felt  that  the  tiim>  was  nearly  ripe  for  a  movement  of  this  kind  and, 
as  soon  as  we  can  arrange  for  this  meeting.  I  will  go  down  to  California  and  go 
over  the  situation  with  them.  If  we  can  get  this  spread  on  shop  and  also  get 
our  selects  evened  up.  it  will  mean  forty  or  fifty  thousand  dollars  per  year  for 
Boise-Payette — which  you  can  readily  see  is  worth  trying  for,  and  I  know  that 
you  agree  with  me  that  Western  Pine  shop  has  been  sold  entirely  too  cheap. 

P^fforts  were  made  to  hold  the  conference  on  July  30-31,  in  connec- 
tion with  a  joint  meeting  of  the  Western  Pine  and  West  Coast  asso- 
ciations, but  for  some  reason  the  California  mills  were  not  repre- 
sented. Some  of  them,  however,  shortly  before  the  meeting,  charac- 
terized the  advances  recently  put  into  effect  by  Inland  Empire  mills 
as  "incredible"  and  one  of  them,  in  telegraphing  refusal  to  attend 
meeting,  stated  that  "  can  not  conceive  tremendous  advances." 

The  Inland  Empire  mills  continued  to  notify  the  California  mills 
of  the  advances  made,  with  what  result  may  be  judged  by  an  extract 
from  a  letter  dated  August  11,  by  the  Boise-Payette  Lumber  Co.  to 
the  East  Oregon  Lumber  Co.  After  stating  its  current  quotations  on 
shop,  the  Boise-Payette  Co.  said : 

Some  of  the  California  people  are  slightly  lower  than  this,  but  the  Sugar  & 
White  Pine  agency  is  asking  the  same  price  we  are  for  the  No.  2  better  and 
$40.00  for  the  No.  3. 

On  November  28,  R.  E.  Irwin,  of  the  Boise-Payette  Lumber  Co., 
wrote  the  Red  River  Lumber  Co.,  of  Westwood,  Calif.,  of  substantial 
advances  recently  made  and  stating: 

Some  time  ago  I  made  a  prediction  that  5/4  and  6/4  No.  2  shop  would  go  to 
$60.00  on  a  57  cent  rate ;  we  are  approaching  that  very  closely  now. 

R.  E.  Irwin,  on  December  8,  1919,  wrote  R.  M.  Pray  of  the  Red 
River  Lumber  Co.,  Westwood,  Calif.,  in  part  as  follows: 

I  have  your  very  valued  letter  of  the  2nd  and  thank  you  very  much  for  the 
Information.  Just  as  soon  as  I  can  get  in  touch  with  Mr.  Case  and  some  of  the 
Weyerhaeuser  mills  in  the  north,  I  will  talk  over  the  shop  situation  with  them, 
as  we  want  to  keep  our  shop  prices  about  in  line  with  the  California  prices. 

Advances  made  by  the  Inland  Empire  mills  in  December,  1919, 
were  also  promptly  communicated  to  the  California  producers. 


142  LUMBEB  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

RESTRICTION  OF  PRODUCTION  UNDER  AUSPICES  WESTERN  PINE 
MANUFACTURERS'  ASSOCIATION. 

In  considering  curtailment  of  production  among  the  members  of 
the  Western  Pine  Manufacturers'  Association,  it  should  be  remem- 
bered that  the  great  bulk  of  their  output  is  controlled  by  a  very  few 
groups,  the  more  important  of  which  have  been  mentioned  in  another 
connection. 

The  association  issues  a  weekly  barometer  similar  to  that  gotten 
out  by  the  Southern  Pine  and  West  Coast  Lumbermen's  Associations 
(see  p.  — ).  This  shows  graphically  the  relation  of  the  members' 
combined  current  production  to  current  orders  and  shipments,  and 
the  relation  of  actual  production,  orders,  and  shipments  to  the 
"  normal  "  production.  The  members  are  accustomed  to  compare 
their  combined  yearly  business  and  to  estimate  their  individual  pro- 
duction for  the  ensuing  year  in  the  light  of  the  preceding  year's 
business.  The  individual  estimates  are  then  compiled  and  distributed 
by  the  association.  Thus,  the  estimate  for  1919  showed  a  decrease  of 
70,000,000  feet  as  compared  with  1918,  notwithstanding  the  stimu- 
lus of  high  prices.  In  1916  a  concerted  curtailment  of  20  to  25  per 
cent  was  carried  out  in  the  territory  of  the  association.  This  was 
apparently  more  for  the  purpose  of  supporting  similar  movements 
in  southern  pine  and  Douglas  Fir  than  because  of  the  western  pine 
situation,  since  it  was  conducted  in  the  face  of  a  shortage  of  stock 
in  the  Inland  Empire.  Curtailment  by  the  elimination  of  night 
running  was  also  the  subject  of  discussion  among  the  association  mills 
in  1917,  but  the  results  of  the  discussion  upon  production  were  not 
disclosed  by  the  investigation. 

The  sort  of  advice  given  the  members  by  the  secretary  as  to  their 
production  is  illustrated  by  the  following  extract  from  a  circular 
dated  January  13,  1916: 

What  the  market  will  be  beyond  the  first  five  or  six  months  of  the  year 
rests  entirely  with  the  manufacturers  of  the  country.  Reasonable  restraint 
in  production  will  make  1916  a  banner  year.  Any  disposition  to  greatly  extend 
production  is  liable  to  spoil  the  second  half  of  it. 

This  is  a  word  of  warning  which  we  think  every  manufacturer  should  take 
to  heart  personally. 

On  June  6,  1916,  J.  P,  McGoldrick,  of  the  McGoldrick  Lumber  Co., 
Spokane,  Wash  ,  wrote  Chas.  E.  Patten,  of  the  Atlas  Lumber  Co.  of 
Seattle,  stating : 

It  is  absolutely  essential  that  there  should  be  a  general  curtailment  commen- 
surate with  the  demand,  and  in  the  South  they  have  already  started  their  cur- 
tailment, so  that  it  is  up  to  the  Coast  to  follow  suit,  as  the  South,  as  I  understand 
it,  is  very  much  afraid  of  the  Coast  situation. 

?   Important  curtailment  movements  were  organized  and  carried  out 
in  the  South  and  on  the  co#st  during  the  summer  of  1916. 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          143 

The  success  of  the  curtailment  policy  among  the  mills  of  the  West- 
ern Pine  Manufacturers'  Association  was  stated  by  F.  W.  Lewis,  sales 
manager  of  the  Blackwell  &  Panhandle  sales  office,  a  prominent  mem- 
ber of  the  above  association,  in  a  letter  dated  July  20  which  was 
printed  in  the  July  28,  1916,  issue  of  "  Business  and  Lumber  Trade 
Conditions,"  a  publication  edited  by  the  editor  of  the  St.  Louis  Lum- 
berman at  St.  Louis,  Mo. : 

Iii  the  Inland  Empire  the  logging  operations  are  being  curtailed  all  of  the 
time,  and  the  Blackwell  &  Panhandle  lumber  companies  are  running  only  day 
shifts.  They  closed  the  last  one  of  the  night  shifts  July  15th.  In  our  estima- 
tion, the  curtailment  will  probably  be  in  the  neighborhood  of  20  per  cent  or  25 
per  cent,  based  on  1915  figures.  Our  lumber  stock  is  very  short,  and  with  the 
present  volume  of  business,  there  is  no  question  but  the  lumbermen  will  go  into 
winter  with  a  very  light  stock  of  dry  lumber.  We  are  reasonably  sure  the  mar- 
ket will  be  very  firm  this  fall. 

The  councils  of  the  association,  even  during  the  war,  were  fre- 
quently directed  toward  procuring  a  concerted  curtailment  of  pro- 
duction. Thus,  at  the  semiannual  meeting  of  the  Western  Pine 
Manufacturers'  Association  held  on  August  1,  1917,  the  following 
developed,  as  shown  by  the  official  minutes  of  the  meeting : 

Various  members  then  related  conditions  in  their  localities  and  it  was  sug- 
gested that  a  roll  call  be  taken  of  members  present  to  determine  what  their 
curtailment  would  be  during  the  year  as  compared  with  what  they  had  origi- 
nally planned  to  produce.  It  developed  that  most  of  the  members  present  and 
a  few  who  were  not  present,  but  whose  conditions  were  known,  there  would 
be  a  curtailment  of  approximately  308,000.000.  It  was  stated  that  the  coast 
mills  were  probably  not  producing  at  that  time  more  than  30%  of  wuat  they 
would  produce  were  labor  conditions  normal. 

Labor  difficulties  were  undoubtedly  a  factor  in  war-time  produc- 
tion but  that  factor  was  only  one  of  many  which  the  association 
members  discussed  with  a  view  to  a  harmonious  policy. 

In  November,  1917,  Secretary  Cooper  wrote  T.  A.  McCann,  mana- 
ger of  the  Shevlin-Hixon  Co.,  arguing  strongly  for  a  reduction  in 
output  by  elimination  of  night  running.  Mr.  McCann  refused  to 
consider  the  suggestion.  Secretary  Cooper  then  wrote  in  part  as" 
follows : 

As  a  matter  of.  fact,  I  don't  think  we  are  going  to  be  able  to  produce  enough 
to  approach  over  production,  as  labor  and  other  conditions  are  going  to  pretty 
nearly  fix  our  condition  for  us.  My  plan  in  calling  the  meeting  was  to  suggest 
that  we  get  an  inventory  of  everybody'.-,  situation  and  if  possible  work  out 
through  a  committee  some  plan  of  reducing  the  output  to  what  we  thought 
could  be  produced,  my  own  position  being  that  night  runs  were  more  essential 
in  some  operations  than  others  and  that  some  operations  didn't  plan  to  run 
nights  anyway  and  that  it  would  be  much  better  to  take  the  normal  perform- 
ance of  a  plant  into  consideration  and  then  reduce  it  fifteen  or  t\venty  per  cent, 
or  whatever  was  thought  desirable,  in  a  way  that  could  be  worked  out,  rather 
than  to  try  to  eliminate  flatly  any  night  sawing.  However,  the  most  of  the 


144  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

people  here   seem   to   think   the  elimination  of  the  night  run   was   the  only 
solution. 

Mr.  McCann's  position  was  later  reversed  on  instructions  from 
E.  L.  Carpenter,  president  of  the  Shevlin-Hixon  Co.,  who  tele- 
graphed Mr.  McCann  on  February  1,  1918,  as  follows : 

Think  four  weeks  shut  down  advisable  at  Bend  starting  middle  this  month 
or  last  of  this  week  if  weather  conditions  are  bad  we  are  going  to  have  to 
mark  time  for  sixty  days  and  a  general  slow  down  of  production  during  the 
bad  weather  will  be  a  good  thing  all  around  your  operatives  have  been  em- 
ployed practically  without  vacation  for  nearly  three  years  and  I  have  no 
doubt  a  vacation  will  be  welcomed  by  most  of  them  will  be  glad  to  learn  that 
your  association  members  favor  working  along  these  lines  necessary  readjust- 
ment cannot  be  hurried  and  we  will  be  wise  if  we  recognize  the  fact  and  keep 
our  heads  level.  Shop  common  and  selects  should  be  advanced. 

Early  in  the  fall  of  1918  there  was  a  slackening  in  demand,  which 
had  the  effect  of  disturbing  the  prices  of  southern  pine,  Douglas  fir, 
and,  to  some  extent,  of  western  pine.  On  September  16,  1918,  F.  D. 
Becker,  secretary  of  the  Montana  association,  issued  a  circular  to  his 
members,  describing  a  general  meeting  of  Inland  Empire  operators 
and  sales  managers  held  on  September  13.  Besides  showing  an 
agreement  to  maintain  existing  concession  cards,  the  circular  con- 
tained the  following  references  to  curtailment : 

A  survey  was  made  of  the  cut  to  date  compared  with  last  year,  stock  on 
hand,  a  review  of  the  orders  on  hand,  and  said  orders  being  small  in  pro- 
portion to  a  year  ago. 

*  *  •  •  *  *  • 

Many  expressions  were  made  in  regard  to  curtailment  for  the  reason  that 
labor  was  so  scarce  and  that  night  runs  should  be  eliminated  as  far  as  prac- 
ticable. 

On  September  18  Secretary  Cooper  issued  a  circular  in  which  he 
said: 

My  own  belief  is  that  the  immediate  need  is  a  reasonably  general  curtailment 
perhaps  on  the  part  of  all  mills  in  our  own  territory,  and  on  the  part  of  tho 
majority  of  coast  mills,  or  at  any  rate  those  who  are  not  sawing  ship  timbers 
or  airplane  stock. 

The  minutes  of  a  meeting  of  the  Montana  Lumber  Manufacturers' 
Association  on  September  20,  1918,  contain  the  following  with  refer- 
ence to  curtailment: 

At  a  preliminary  meeting  held  the  night  before  *  *  *  there  was  some 
discussion  in  regard  to  *  *  *  curtailment.  *  *  *  Market  conditions 
were  taken  up  and  discussed  from  every  angle  thought  of,  and  it  looked  to 
the  members  as  if  something  had  to  be  done  towards  curtailment  and  the 
secretary  reported  that  in  the  month  of  July,  shipments  of  the  Montana  mills 
to  Montana  trade  were  about  25%  of  what  they  had  been  in  the  same 
month  the  previous  year  and  in  the  month  of  August  the  shipments  had  been 
about  18%  that  month  that  they  were  the  month  in  the  previous  year. 
At  the  same  time  die  cut  up  to  the  first  of  September  was  greater  than  Sep- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  145 

teinber  1917  and  the  stock  on  hand  was  considerably  greater  than  a  year  ago. 
*     *     * 

The  War  Industries  Board  Program  was  then  discussed  at  length  resulting 
that  clue  to  shortage  of  labor,  much  curtailed  market,  large  stocks  oft  hand, 
etc.  that  a  general  curtailment  of  manufacturing  seemed  necessary.  The  Sec- 
retary then  referred  to  his  cut  and  shipments  report  and  making  comparisons 
with  the  year  previous,  all  of  which  indicated  that  it  would  be  very  advisable 
from  a  patriotic  standpoint  to  reduce  production  as  much  as  possible  and 
reports  from  the  Inland  Empire  and  other  sections  of  the  U.  S.  also  indicated 
that  general  curtailment  seemed  to  be  in  order. 

On  September  28  J.  P.  McGoldrick  wrote  T.  A.  McCann  in  part, 
as  follows: 

I  admit  the  law  of  accidents  and  although  we  do  not  expect  it,  the  war 
may  be  over  this  year  or  next.  With  the  attitude  of  the  Government  as  to 
non-essentials  necessary  in  the  interests  of  the  prosecution  of  the  war,  I  think 
it  only  good  judgment  for  individual  curtailment  of  output  and  selective 
logging  as  much  as  possible.  This  being  true  whether  a  company  has  been 
operating  two  shifts  or  one  shift.  Those  operating  two  shifts  to  curtail  to 
one,  those  on  one  shift  curtail  in  length  of  time. 

It  is  impossible  to  secure  an  equitable  curtailment  for  various  reasons. 
Mills  in  Montana  producing  50%  or  over  of  fir  and  larch  will  certainly 
be  in  a  poor  position  to  market  their  product  as  against  the  Coast  and  the 
restriction  as  to  domestic  building.  I  feel  that  the  embargo  and  the  building 
restrictions  as  a  general  rule  will  be  proven  by  the  exceptions,  but  the  ex- 
ceptions will  take  time  and  effort.  Manufacturers  individually  and  in  dis- 
tricts will  combat  the  general  restriction  policy  and  I  feel  that  the  Inland 
Empire  should  be  represented  early  in  the  game. 

On  October  25  Mr.  J.  P.  McGoldrick,  of  the  McGoldrick  Lumber 
Co.,  wrote  a  letter  to  Mr.  Cooper,  the  association  secretary,  in  which 
he  said : 

I  am  calling  a  quiet  meeting  of  a  number  £>f  the  manufacturers  for  tomorrow 
afternoon  at  two  o'clock  so  as  to  get  the  concensus  of  opinion  as  to  the 
proper  course  to  pursue  in  this  district  in  regard  to  curtailment,  maintenance 
of  prices,  and  joint  cooperation  in  soliciting  indirect  industral  war  requirements. 
Would  it  not  be  well  for  Montana  and  Eastern  Oregon  to  hold  a  meeting  prior 
to  the  30th  so  that  each  director  will  be  fully  advised? 

On  October  28  Secretary  Cooper  issued  a  bulletin  to  the  members, 
as  follows: 

As  you  are  doubtless  aware,  there  has  been  considerable  curtailment  on  this 
year's  production  in  our  territory.  You  are  also  aware  that  our  position  has 
been  all  along  that  we  were  willing  to  curtail  to  meet  war  emergencies,  and 
advocated  other  districts  doing  their  proportionate  share. 

In  order  that  we  may  have  exact  facts  and  figures,  will  you  advise  me. 
promptly  exactly  what  you  are  doing  to  curtail  this  year,  what  reduction  in 
output  it  will  result  in  and  how  much  you  plan  to  curtail  and  in  what  way 
during  the  coming  year? 

This  information  will  be  of  value  to  our  representatives  in  Washington  in 
showing  our  good  faith.  As  we  are  actually  curtailing  to  a  considerable  degree, 
we  should  make  use  of  the  fact. 


146  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Don't  put  this  off.  Please  send  in  the  information  I  am  requesting  by  return 
mail. 

The  .dullness  in  the  lumber  market  which  began  early  in  the  fall  of 
1918  continued  after  the  armistice.  The  willingness  to  curtail  pro- 
duction lost  nothing  by  the  sudden  cessation  of  hostilities.  An  asso- 
ciation meeting  was  called  for  November  21.  Writing  to  the  secre- 
tary on  November  13  with  reference  to  the  urgency  of  the  meeting, 
J.  P.  McGoldrick,  of  the  McGoldrick  Lumber  Co.,  suggested  that 
each  member  present  a  comparative  statement  of  the  cut,  sales,  and 
stock  on  hand  for  the  preceding  four  years,  and  added : 

These  four  years  should  be  fairly  representative  as  to  demand  and  produc- 
tion and  on  which  base  our  regulations  for  the  year  1919. 

Secretary  Cooper  urged  the  members  to  bring  such  information 
to  the  meeting. 

The  official  minutes  of  the  association's  annual  meeting  in  Febru- 
ary, 1919,  contain  the  following: 

It  was  also  moved  that  the  secretary  get  information  on  production  for  the 
coming  year  and  find  out  who  planned  to  run  one  shift  and  who  planned  to 
run  two. 

Further  information  on  this  point  is  found  in  a  letter  of  February 
14  written  by  B.  H.  Hornby,  of  the  Dover  Lumber  Co.,  one  of  the 
Weyerhaeuser  group.  Writing  as  one  who  had  been  present  at  the 
meeting  and  outlining  the  three  chief  subjects  of  interest  brought 
before  it,  Mr.  Hornby  said : 

Third,  Contemplated  Production  for  1919;  This  question  was  brought  up, 
as  it  was  rumored  that  a  number  of  the  mills  were  quietly  laying  their  plans 
for  day  and  night  runs,  at  the  same  time  agitating  the  question  of  one  shift 
only,  and  to  serve  notice  on  such  plants  that  a  like  move  was  contemplated 
by  other  mills. 

The  general  shortage  of  supply  became  pronounced  by  July,  1919, 
and  was  seized  upon  by  the  association  members  to  make  a  radical 
advance  in  prices  effective  July  14.  The  Blackwell-Panhandle 
sales  office,  in  notifying  its  salesmen  as  well  as  association  members 
of  its  concurrence  in  the  advance  on  July  15,  said : 

Owing  to  the  curtailment  as  well  as  high  cost  of  production  it  has  become 
necessary  for  us  to  advance  our  prices  over  card  No.  7  as  follows. 

Notwithstanding  the  "  incredible  "  and  "  anarchistic  "  prices  put 
into  effect  in  the  summer  of  1919,  the  continued  shortage  of  produc- 
tion worked  to  the  advantage  of  the  manufacturers  and  the  associa- 
tion formed  the  medium  through  which  the  members  conferred  on 
the  matter.  The  production  of  western  pine  for  the  year  1919,  as 
shown  by  the  association  barometer,  was  about  960,000,000  feet,  as 
against  orders  of  about  950,000,000  feet  and  shipments  of  about  830,- 
000,000  feet.  The  production  for  1919  had  been  estimated  in  ad- 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.  147 

vance  at  1,340,000,000,  as  against  an  actual  1918  production  of 
1,400,000,000.  The  facility  with  which  the  production  planned  was 
modified  to  accord  with  the  orders  placed  is  worthy  of  note. 

ANALYSIS    OF   PRODUCTION   POLICY    DURING    1920-21. 

In  the  fall  of  1919  the  members  estimated  that  their  combined 
production  for  1920  would  not  reach  75  per  cent  of  normal,  not- 
withstanding still  higher  prices  than  those  of  the  summer  and  the 
menace  of  a  lumber  famine. 

Until  February,  1920,  prices  continued  to  ascend  and  orders  placed 
more  than  absorbed  the  current  production.  The  American  Lumber- 
man of  February  7,  1920,  stated  in  its  market  comment  on  western 
pine : 

Logging  operations  are  going  forward  encouragingly  and  the  mills  expect 
a  production  this  year  considerably  in  excess  of  the  1919  cut,  and  furthermore 
expect  a  ready  market  for  every  foot  of  output. 

When  the  market  had  reached  its  peak  in  March,  1920,  the  Black- 
well-Panhandle  sales  office  circularized  its  sales  connections  and  some 
of  its  competitors,  criticizing  the  cut  in  prices  by  the  Weyerhaeuser 
mills,  stating  that  prices  were  firmly  held  by  itself  and  others,  and 
also  stating: 

Do  not  look  for  our  prices  to  be  reduced  until  we  can  reach  at  least  75 
per  cent  of  normal  production,  which  will  not  be  this  year.  Other  mills  are 
in  the  same  boat. 

.  During  the  early  spring  of  1920  the  relation  of  orders  to  produc- 
tion fluctuated  from  week  to  week,  orders  sometimes  being  above 
and  sometimes  below  the  production.  By  May  22,  the  total  cut 
for  the  year  had  overtaken  and  passed  the  total  orders  and  about 
May  15  orders  suddenly  dropped  to  about  50  per  cent  of  the  weekly 
production,  and  in  June  to  less  than  40  per  cent.  During  May  and 
June,  nevertheless,  the  weekly  production  ran  rather  consistently 
above  normal.  The  trend  of  prices  about  this  time  was  unmistak- 
ably downward,  but  they  were  still  sufficiently  attractive  to  keep 
the  weekly  production  in  excess  of  normal  until  October,  when  it 
fell  sharply,  and  continued  far  below  normal  until  the  end  of  the 
year. 

The  total  actual  production  of  western  pine  by  association  mem- 
bers for  1920,  as  shown  by  the  barometer,  was  about  1,175,000,000 
feet,  equivalent  to  about  80  per  cent  of  normal.  It  will  be  remem- 
bered that  the  members  had  estimated  their  1920  production  at  less 
than  75  per  cent  of  normal,  but  in  February  the  mills  were  expect- 
ing a  considerable  increase  in  output  over  1919.  This  increase  over 
the  1919  production  was  no  doubt  due  to  the  unusually  attractive 
prices  which  prevailed  during  the  greater  part  of  the  year.  Orders 
for  the  year  were  only  two-thirds  of  the  production,  which  accounted 


148  LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

for  the  declining  market  during  the  last  several  months  of  the 
year. 

From  the  beginning  of  1921  until  April  the  association  barometer 
showed  a  consistent  excess  of  orders  and  shipments  over  the  weekly 
production,  which  had  been  reduced  to  about  20  per  cent  of  normal. 
Late  in  April  and  during  May,  however,  orders  and  shipments  fell 
off  sharply  and  production  exceeded  them.  The  effect  of  this  upon 
production  during  such  a  favorable  sawing  season  caused  comment 
in  the  trade  press. 

The  American  Lumberman  of  May  7,  1921,  commented  as  follows: 

Manufacturers  of  western  pines  are  experiencing  on  the  whole  a  decided  bet- 
terment in  the  volume  of  inquiries  and  an  increasing  number  of  them  are 
resulting  in  orders.  Business  booked,  however,  is  far  below  normal  and  this 
situation  is  reflected  in  the  late  resumption  of  sawing  activities  thruout  the 
western  pine  producing  regions.  In  the  Inland  Empire,  for  example,  where 
manufacturing  is  normally  at  this  time  in  full  swing,  it  is  only  approximately 
50  percent  of  normal  and,  judging  from  reports,  it  will  be  some  time  before 
production  proceeds  on  a  normal  basis,  if  at  all  this  season.  It  is  certain  that 
the  total  production  for  1921  will  be  much  below  that  for  1920. 

The  issue  of  May  21,  1921,  contained  the  following: 

The  upper  grades  remain  firm  in  price  while  shop  prices  seem  to  have  stopped 
declining,  but  here  and  there  concessions  in  common  grades  are  to  be  obtained. 
Of  course,  if  the  buyer  is  after  a  particularly  large  block  of  stock  some  con- 
cessions can  be  obtained,  but  nevertheless  prices  are  gradually  being  stabilized, 
as  the  knowledge  is  going  forth  that  stocks  are  anything  but  large.  In  the 
Inland  Empire  the  demand  is  increasing  slowly  and  is  of  such  a  nature  that 
stocks  on  hand  are  becoming  broken  even  in  this  section,  where  large  stocks  are 
usually  carried  by  the  manufacturers.  Production  is  very  slow  about  getting 
under  way  and  it  is  evident  that  it  is  as  yet  below  the  level  which  will  permit 
manufacturers  fully  to  fill  up  the  holes  made  in  stocks  by  orders  already  booked. 

The  barometer  reports  of  the  Western  Pine  Manufacturers'  Asso- 
ciation show  that  during  the  summer  of  1921  the  total  weekly  pro- 
duction usually  exceeded  the  total  orders  and  shipments.  In  Septem- 
ber, orders  and  shipments  took  the  lead  over  production  to  such  an 
extent  that  by  the  end  of  December  production  for  the  year  as  a  whole 
had  fallen  slightly  behind  orders  and  shipments.  The  total  cut  for 
1921  was  about  765,000,000  feet,  the  total  orders  about  795,000,000, 
and  the  total  shipments  about  797,000,000  feet.  In  other  words,  stocks 
on  hand  were  lower  at  the  end  of  1921  than  at  the  end  of  1920. 

The  shortage  of  mill  stocks  in  the  Inland  Empire  was  the  subject 
of  comment  in  the  trade  press,  as  an  accompaniment  of  the  price  ad- 
vances which  took  place  in  the  fall  of  1921.  Thus,  the  American 
Lumberman  of  December  24,  1921,  referred  to  the  optimism  of  south- 
ern Oregon  manufacturers  and  stated : 

Stocks  of  upper  grades  and  Nos.  1  and  2  shop,  here  as  in  the  Inland  Empire, 
are  unimproved,  and  it  is  believed  that  the  mills  will  be  totally  cleaned  out  be- 
fore new  dry  lumber  begins  to  come  in, 


LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS.          149 

The  association  production  of  less  than  800,000,000  feet  during 
1921  is  in  striking  contrast  to  an  output  of  about  1,400,000,000  feet  in 
1918,  a  production  of  about  960,000,000  for  1919,  and  of  1,175,000,000 
for  1920.  It  is  also  in  contrast  with  the  current  shortage  of  mill 
stocks,  as  above  indicated,  and  a  normal  production  more  than  double 
the  actual. 

As  shown  in  another  connection  (pp.  113-114)  prices  have  already 
responded  to  the  reduction  of  output  below  the  current  demand  and 
have  made  marked  advances,  with  a  strong  prospect  of  further  in- 
creases during  the  spring  of  1922.  That  the  manufacturers  realize 
that  their  power  over  the  market  is  conditioned  upon  a  restriction  of 
production  even  below  the  low  figures  of  1921  is  indicated  by  the  fol- 
lowing extract  from  the  American  Lumberman  of  January  14,  1922 : 

The  mill  of  the  Craig  Mountain  Lumber  Co.,  at  Winchester,  Idaho,  is  operat- 
ing one  shift,  while  the  planing  mill  is  running  intermittently  to  fill  orders. 
Most  large  mills  of  the  district  are  shut  down  for  the  winter.  The  Craig  Moun- 
tain company  also  has  a  full  crew  at  work  in  the  woods,  whereas  most  other 
companies  are  materially  curtailing  their  production  as  compared  with  last 
year.  "  There  is  still  a  strong  demand  for  shop  lumber,"  said  E.  H.  Van 
Ostrand,  president,  who  was  in  Spokane  from  Winchester  this  week.  "  We 
have  been  obliged  to  withdraw  from  the  market  for  the  next  thirty  days.  We 
have  cut  1,000,000  feet  of  shop  lumber  in  the  woods  in  the  last  month.  We 
look  for  a  much  better  business  this  spring."  "  Yes,  we  expect  a  much  better 
business  this  year,"  said  J.  P.  McGoldrick,  president  of  the  McGoldrick  Lumber 
Co.,  standing  nearby,  "  but  ice  are  not  going  to  cut  our  heads  off.  I  do  not 
expect  this  year's  cut  to  average  more  than  50  per  cent  of  last  year's.  Is  that 
a  fair  estimate,  ^fr.  Van  Ostrand?"  "  Well,  I  should  say  between  50  and  60 
per  cent,"  said  Mr.  Van  Ostrand.  "Inquiries  are  coming  in  freely,"  continued 
Mr.  McGoldrick,  "  and  we  look  for  an  increase  of  business  to  start  in  con- 
siderable volume  about  the  first  of  March.  We  have  about  60  per  cent  of  our 
usual  number  of  men  in  the  woods,  and  when  our  mill  starts  this  spring  it  will 
operate  one  shift  instead  of  two."  (Italics  by  the  Commission.) 

LONG   CONTINUANCE   OF   FOREGOING   ACTIVITIES   BY   WESTERN 
PINE  MANUFACTURERS'  ASSOCIATION. 

The  use  of  the  association  as  a  medium  for  concerted  action  on 
prices  is  not  of  recent  growth,  though  the  openness  of  the  methods  is 
in  striking  contrast  to  the  methods  in  vogue  at  one  period.  The  or- 
ganization was  first  formed  as  the  Western  Pine  Shippers'  Associa- 
tion, and  from  its  inception  in  1905  undertook  the  promulgation  of 
uniform,  standard  prices.  During  the  period  between  1907  and  1914 
the  price  activities  of  the  association  were  conducted  more  or  less 
under  cover,  the  price  lists  being  issued  under  the  name  of  certain 
printers  and  the  connection  of  the  association's  price  committee  there- 
with being  veiled. 

The  Bureau  of  Corporations'  report  on  the  lumber  industry  in 
1914  (Part  IV)  made  only  slight  reference  to  the  Western  Pine 


150          LUMBER  MANUFACTURERS'  TRADE  ASSOCIATIONS. 

Manufacturers'  Association,  but  the  bureau  nevertheless  had  obtained 
data  indicating  that  this  association  was  following  a  price  policy 
similar  to  that  of  other  associations.  Within  a  few  months  after  the 
publication  of  the  bureau's  report  the  Western  Pine  Manufacturers' 
Association  came  out  into  the  open  with  its  price  activities  and  had 
carried  them  on  without  a  break  till  the  close  of  the  Commission's 
investigation  in  the  spring  of  1920. 

Between  1907  and  1914  the  association  price  list  was  issued  under 
the  name  of  the  Shaw-Borden  Co.,  printers  at  Spokane.  The  direct 
connection  of  the  association  with  the  Shaw-Borden  price  list  was 
shown  in  a  letter  dated  October  9, 1912,  to  the  Grande  Konde  Lumber 
Co.,  in  which  the  secretary  said: 

I  had  fully  intended  to  advise  you  some  days  ago  that  we  succeeded  in 
making  the  change  talked  over  at  La  Grande  in  the  Shaw-Borden  List. 

On  the  same  day  the  secretary  wrote  to  the  Cascade  Lumber  Co., 
North  Yakima,  Wash. : 

You  have  doubtless  received  by  this  time,  a  copy  of  the  new  Shaw-Borden 
List  of  Oct.  1st,  and  if  you  get  it  you  will  note  that  6"  No.  3  Western  Pine 

has  been  raised  $2.00  on  the  list. 

******* 

This  change  was  made  to  put  the  list  in  line  with  Eastern  Oregon,  as  at 
our  meeting  in  La  Grande  we  found  that  Eastern  Oregon  mills  were  obtaining 
higher  than  existing  list  price  on  6"  No.  3  Western  Pine. 

Another  letter  on  the  same  day  was  written  by  the  secretary  to 
Mr.  Vincent  Palmer,  of  LaGrande,  Oreg.,  which  said : 

The  recent  concession  sheet  shows  a  discount  of  $2.00  on  6"  No.  3  Western 
Pine,  as  we  have  changed  this  on  the  new  list  which  has  just  been  issued, 
raising  the  list  price  $2.00  to  get  it  more  in  line  with  the  Eastern  Oregon 
prices.  This  was  in  accordance  with  the  ideas  expressed  at  the  LaGrande 
Meeting. 

The  decision  to  have  the  association  openly  sponsor  the  Shaw- 
Borden  list  in  the  future  and  the  tacit  admission  that  it  had  secretly 
done  so  in  the  past,  appear  in  the  following  extracts  from  a  letter 
of  January  18, 1915.  Writing  to  J.  R.  Toole  of  the  Anaconda  Copper 
Mining  Co.,  of  Bonner,  Mont.,  Secretary  Cooper  said  in  part : 

At  the  meeting  here  Saturday  of  the  sales  managers,  it  was  voted  unanimously 
to  have  the  Association  get  out  the  Shaw-Borden  price  list. 

******* 

The  objection  that  it  might  be  misconstrued  by  the  government  is  one  that 
I  personally  do  not  believe  we  need  consider,  for  I  do  not  see  legally  what 
difference  it  makes  whether  this  list  is  published  by  the  Shaw-Borden  Com- 
pany or  by  the  Association.  The  government  certainly  understands  what  a 
price  list  is  by  this  time,  after  seven  years  of  investigating,  and  I  think  they 
pretty  thoroughly  understand  what  the  Shaw-Borden  list  was. 

There  were  also  occasional  efforts  to  restrict  production  by  means 
of  organized  propaganda  during  the  earlier  years  of  the  association. 

o 


